The Effect Of Auditor Specialization, Client Company Size, Switching Auditor And Audit Fee On Audit Quality (empirical Study Of Property And Real Estate Companies Listed On The IDX)

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The Effect of Auditor Specialization, Client Company Size, Auditor Change, and Audit Fee on Audit Quality: Empirical Study of Property and Real Estate Companies on the IDX

Introduction

Audit quality is a crucial aspect of financial reporting, as it ensures that financial statements accurately reflect a company's financial position and performance. In Indonesia, the property and real estate sectors are significant contributors to the country's economy, and the audit quality of these companies is essential for investors, regulators, and other stakeholders. This study aims to examine the effect of auditor specialization, client company size, auditor changes, and audit costs on audit quality in property and real estate companies listed on the Indonesia Stock Exchange (IDX) during the 2013-2015 period.

Methodology

This study uses a purposive sampling technique to collect data from 90 property and real estate companies listed on the IDX. The data used is obtained from the audited financial statements of these companies. The audit quality in this study is proxied by the size of a public accounting firm. Logistics regression analysis is used to test the research hypothesis.

Results

The results of this study show that auditor specialization variables, client company size, auditor changes, and audit costs have no significant influence on audit quality. These findings indicate that these factors do not play a role in improving audit quality in property and real estate companies listed on the IDX during the study period.

Deeper Analysis

Auditor Specialization

Research results that do not show a significant effect of auditor specialization on audit quality may be caused by several factors. First, the specialization of auditors in the property and real estate sectors may not be quite in-depth and structured in Indonesia, so that it does not have a significant impact on audit quality. Second, audit quality can be influenced by other factors such as auditor competencies and integrity, which are not measured in this study.

Client's Company Size

Research results showing the absence of a significant effect of the client's company size on audit quality can be interpreted as follows. First, property and real estate companies listed on the IDX may have a good level of transparency and corporate governance, so that the company's size is not a determinant factor in audit quality. Second, the regulations and accounting standards that apply in Indonesia may have been strong enough to guarantee audit quality, regardless of company size.

Auditor Change

The results of research showing the absence of a significant influence of the auditor's change on audit quality can be explained for several reasons. First, property and real estate companies may not always choose to replace auditors for audit quality reasons, but more because of other factors such as costs or relationships with public accounting firms. Second, the process of changing auditors may require a long time and adaptation process, so that its effect on audit quality may not be seen in a relatively short research period.

Audit Costs

The results of research showing the absence of a significant effect of audit costs on audit quality may be caused by several factors. First, audit costs are not always an indicator of audit quality. Auditors who have higher audit costs do not always guarantee better audit quality. Second, other factors such as business complexity and audit risk may be more influential on audit costs than audit quality.

Implications and Suggestions

The results of this study have important implications for stakeholders, such as investors, regulators, and professional accountants. These findings indicate that the factors studied do not have a significant influence on audit quality in the property and real estate sectors. Therefore, further research is needed to identify other factors that can affect audit quality in this sector.

In addition, this research provides several suggestions:

  • For regulators, it is essential to continue to develop effective accounting rules and standards to improve audit quality in the property and real estate sectors.
  • For professional accountants, it is crucial to continue to improve their competence and integrity to improve audit quality.
  • For investors, it is necessary to do a more in-depth analysis of the financial statements of property and real estate companies, not only focusing on the size of a public accounting firm.

Conclusion

This study shows that the specialization of auditors, client company size, auditor changes, and audit costs do not have a significant effect on audit quality in property and real estate companies listed on the IDX. This finding provides valuable information for stakeholders to understand the factors that affect audit quality in the property and real estate sectors. However, further research needs to be done to examine other factors that might affect the quality of audit in this sector.

Limitations

This study has several limitations. First, the data used is obtained from a specific period (2013-2015), which may not be representative of the current situation. Second, the study only focuses on property and real estate companies listed on the IDX, which may not be representative of all companies in the sector. Third, the study only uses a single proxy for audit quality (size of a public accounting firm), which may not capture all aspects of audit quality.

Future Research Directions

Future research should aim to identify other factors that can affect audit quality in the property and real estate sectors. This can include factors such as auditor independence, audit committee effectiveness, and corporate governance. Additionally, future research should aim to examine the impact of audit quality on financial reporting and investor decisions.

References

  • [List of references cited in the study]

Appendices

  • [Appendices containing additional information, such as data collection procedures and survey instruments]

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Frequently Asked Questions (FAQs) about the Effect of Auditor Specialization, Client Company Size, Auditor Change, and Audit Fee on Audit Quality

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of auditor specialization, client company size, auditor changes, and audit costs on audit quality in property and real estate companies listed on the Indonesia Stock Exchange (IDX) during the 2013-2015 period.

Q: What is the significance of this study?

A: This study is significant because it provides valuable information for stakeholders, such as investors, regulators, and professional accountants, to understand the factors that affect audit quality in the property and real estate sectors.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of a specific period (2013-2015) that may not be representative of the current situation, the focus on property and real estate companies listed on the IDX that may not be representative of all companies in the sector, and the use of a single proxy for audit quality (size of a public accounting firm) that may not capture all aspects of audit quality.

Q: What are the implications of this study?

A: The implications of this study are that the factors studied do not have a significant influence on audit quality in the property and real estate sectors. Therefore, further research is needed to identify other factors that can affect audit quality in this sector.

Q: What are the suggestions of this study?

A: The suggestions of this study are that regulators should continue to develop effective accounting rules and standards to improve audit quality in the property and real estate sectors, professional accountants should continue to improve their competence and integrity to improve audit quality, and investors should do a more in-depth analysis of the financial statements of property and real estate companies, not only focusing on the size of a public accounting firm.

Q: What are the future research directions of this study?

A: The future research directions of this study are to identify other factors that can affect audit quality in the property and real estate sectors, such as auditor independence, audit committee effectiveness, and corporate governance, and to examine the impact of audit quality on financial reporting and investor decisions.

Q: What are the benefits of this study?

A: The benefits of this study are that it provides valuable information for stakeholders to understand the factors that affect audit quality in the property and real estate sectors, and it identifies areas for further research to improve audit quality in this sector.

Q: What are the challenges of this study?

A: The challenges of this study are that it requires a large sample size to ensure the reliability of the results, it requires a long period of data collection to capture the effects of the variables studied, and it requires a high level of expertise in accounting and finance to analyze the data and interpret the results.

Q: What are the contributions of this study?

A: The contributions of this study are that it provides new insights into the factors that affect audit quality in the property and real estate sectors, it identifies areas for further research to improve audit quality in this sector, and it provides a framework for future studies on audit quality in the property and real estate sectors.

Q: What are the limitations of the data used in this study?

A: The limitations of the data used in this study are that it is obtained from a specific period (2013-2015) that may not be representative of the current situation, it is obtained from a specific sample of property and real estate companies listed on the IDX that may not be representative of all companies in the sector, and it is obtained from a single source (audited financial statements) that may not capture all aspects of audit quality.

Q: What are the implications of the findings of this study?

A: The implications of the findings of this study are that the factors studied do not have a significant influence on audit quality in the property and real estate sectors, and therefore, further research is needed to identify other factors that can affect audit quality in this sector.

Q: What are the suggestions of the findings of this study?

A: The suggestions of the findings of this study are that regulators should continue to develop effective accounting rules and standards to improve audit quality in the property and real estate sectors, professional accountants should continue to improve their competence and integrity to improve audit quality, and investors should do a more in-depth analysis of the financial statements of property and real estate companies, not only focusing on the size of a public accounting firm.

Q: What are the future research directions of the findings of this study?

A: The future research directions of the findings of this study are to identify other factors that can affect audit quality in the property and real estate sectors, such as auditor independence, audit committee effectiveness, and corporate governance, and to examine the impact of audit quality on financial reporting and investor decisions.