The Influence Of Experience, Independence, Competence And Ethics On Auditor Professional Skepticism (empirical Study At The Medan City Public Accounting Firm)

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The Influence of Experience, Independence, Competence, and Ethics on Auditor Professional Skepticism: An Empirical Study at the Medan City Public Accounting Firm

Introduction

Professional skepticism is a critical attitude possessed by auditors in carrying out financial statement audits. It is essential for auditors to maintain a skeptical mindset to ensure the accuracy and reliability of financial statements. However, the factors that influence auditor professional skepticism are not well understood. This study aims to identify the impact of experience, independence, competence, and ethics on auditor professional skepticism in the Medan City Public Accounting Firm.

Background

Auditor professional skepticism is a critical component of the audit process. It involves the auditor's ability to question and challenge the information provided by clients, and to identify potential errors or irregularities. The importance of professional skepticism has been emphasized by various regulatory bodies, including the International Federation of Accountants (IFAC) and the Public Company Accounting Oversight Board (PCAOB).

Methodology

This study employed a quantitative descriptive research design with a causal associative approach. The data was collected through a questionnaire distributed to 74 auditors working in 8 Public Accounting Firms in Medan. The questionnaire was designed to measure the level of professional skepticism among auditors, as well as their experience, independence, competence, and ethics.

Results

The results of this study showed that experience, competence, and ethics have a significant positive influence on auditor professional skepticism. However, independence did not show a significant effect on professional skepticism. This suggests that auditors who have more experience, are more competent, and have stronger ethical principles are more likely to exhibit professional skepticism.

Analysis of the Effect of Variables on Professional Skepticism

Experience

Work experience is a critical factor in building the skeptical attitudes needed in the evaluation of financial statements. Auditors who have more experience tend to be more able to recognize irregularities and analyze information more critically. This is because experience provides a deeper insight into audit practices and situations that may be found.

Independence

The results of this study showed that independence did not have a significant effect on auditor professional skepticism. One possible reason for this is that auditors in Medan may face similar challenges in maintaining independence due to pressure from clients or other external factors. This highlights the need for more efforts to maintain the independence of auditors, so that it can be more influential on the skeptical attitudes taken.

Competence

Auditor competence, which includes knowledge and skills in the field of accounting and auditing, is a strong driver for professional skepticism. Competent auditors tend to be more confident in expressing opinions and are more skilled in assessing the reliability of the information presented by clients.

Ethics

Ethics also plays an important role in forming professional skepticism. Auditors who have strong ethical principles will be more likely to conduct a critical evaluation of the information provided, and dare to reject pressure coming from any party. High awareness of ethics is expected to increase integrity and honesty in the audit process.

Conclusion

This study provides valuable insights into the factors that influence auditor professional skepticism. While independence did not show a significant effect, experience, competence, and ethics have been proven to have a greater role in forming professional auditor skepticism in the city of Medan. To improve audit quality, it is essential for relevant parties, such as professional associations and educational institutions, to pay attention to the development of experience, increase competence, and strengthen the values of ethics among auditors. This will certainly have a positive impact on the integrity and quality of audited financial statements.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Develop Experience: Auditors should be given opportunities to gain experience in the field of accounting and auditing. This can be achieved through on-the-job training, mentorship programs, and continuous professional development.
  2. Increase Competence: Auditors should be required to possess the necessary knowledge and skills in the field of accounting and auditing. This can be achieved through education and training programs.
  3. Strengthen Ethics: Auditors should be encouraged to develop strong ethical principles. This can be achieved through ethics training programs and the promotion of a culture of integrity and honesty within the profession.
  4. Maintain Independence: Auditors should be required to maintain their independence in the audit process. This can be achieved through the implementation of policies and procedures that promote independence, such as the rotation of audit teams and the prohibition of non-audit services.

Limitations of the Study

This study has several limitations. Firstly, the sample size was relatively small, which may limit the generalizability of the findings. Secondly, the study was conducted in a specific context, which may limit the applicability of the findings to other contexts. Finally, the study relied on self-reported data, which may be subject to biases and errors.

Future Research Directions

Future research should aim to build on the findings of this study by exploring the following research questions:

  1. What are the specific factors that influence auditor professional skepticism?
  2. How can auditor professional skepticism be measured and evaluated?
  3. What are the consequences of auditor professional skepticism on audit quality and financial reporting?
  4. How can auditor professional skepticism be promoted and maintained in the audit process?

By addressing these research questions, future research can provide a more comprehensive understanding of auditor professional skepticism and its role in ensuring the accuracy and reliability of financial statements.
Frequently Asked Questions (FAQs) about Auditor Professional Skepticism

Q: What is auditor professional skepticism?

A: Auditor professional skepticism is a critical attitude possessed by auditors in carrying out financial statement audits. It involves the auditor's ability to question and challenge the information provided by clients, and to identify potential errors or irregularities.

Q: Why is auditor professional skepticism important?

A: Auditor professional skepticism is essential for ensuring the accuracy and reliability of financial statements. It helps auditors to identify potential errors or irregularities, and to take corrective action to prevent or mitigate their impact.

Q: What are the factors that influence auditor professional skepticism?

A: The factors that influence auditor professional skepticism include experience, independence, competence, and ethics. This study found that experience, competence, and ethics have a significant positive influence on auditor professional skepticism, while independence did not show a significant effect.

Q: How can auditors develop their professional skepticism?

A: Auditors can develop their professional skepticism by gaining experience in the field of accounting and auditing, increasing their competence through education and training, and strengthening their ethical principles through ethics training programs and the promotion of a culture of integrity and honesty within the profession.

Q: What are the consequences of auditor professional skepticism on audit quality and financial reporting?

A: Auditor professional skepticism can have a positive impact on audit quality and financial reporting by helping auditors to identify potential errors or irregularities, and to take corrective action to prevent or mitigate their impact. This can lead to more accurate and reliable financial statements, and a reduction in the risk of financial reporting errors or irregularities.

Q: How can auditor professional skepticism be measured and evaluated?

A: Auditor professional skepticism can be measured and evaluated through various methods, including surveys, interviews, and observation. This study used a questionnaire to measure the level of professional skepticism among auditors, as well as their experience, independence, competence, and ethics.

Q: What are the limitations of this study?

A: This study has several limitations, including a relatively small sample size, a specific context, and reliance on self-reported data. Future research should aim to build on the findings of this study by exploring the specific factors that influence auditor professional skepticism, and by developing more comprehensive and objective measures of auditor professional skepticism.

Q: What are the implications of this study for auditors, regulators, and other stakeholders?

A: The findings of this study have implications for auditors, regulators, and other stakeholders. Auditors should be encouraged to develop their professional skepticism through experience, competence, and ethics training. Regulators should consider implementing policies and procedures that promote auditor independence and professional skepticism. Other stakeholders, including investors and financial analysts, should be aware of the importance of auditor professional skepticism in ensuring the accuracy and reliability of financial statements.

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

A: Future research should aim to build on the findings of this study by exploring the specific factors that influence auditor professional skepticism, and by developing more comprehensive and objective measures of auditor professional skepticism. This may involve conducting further surveys, interviews, and observation studies, as well as analyzing data from existing sources, such as audit reports and financial statements.

Q: What are the practical implications of this study for auditors and regulators?

A: The practical implications of this study for auditors and regulators are that they should prioritize the development of auditor professional skepticism through experience, competence, and ethics training. This can be achieved through various means, including on-the-job training, mentorship programs, and continuous professional development. Regulators should also consider implementing policies and procedures that promote auditor independence and professional skepticism.

Q: What are the potential applications of this study?

A: The potential applications of this study are numerous, including:

  1. Audit quality improvement: The findings of this study can be used to improve audit quality by promoting auditor professional skepticism.
  2. Financial reporting accuracy: The findings of this study can be used to improve financial reporting accuracy by promoting auditor professional skepticism.
  3. Regulatory policy development: The findings of this study can be used to inform regulatory policy development, particularly with respect to auditor independence and professional skepticism.
  4. Education and training: The findings of this study can be used to develop education and training programs for auditors, particularly with respect to professional skepticism.

By addressing these research questions and exploring the practical implications of this study, future research can provide a more comprehensive understanding of auditor professional skepticism and its role in ensuring the accuracy and reliability of financial statements.