The Influence of Audit Rotation, Audit Tenure and Workload on

Audit Quality at Consumer Goods Sector Manufacturing Companies

listed in Indonesia Stock Exchange

Eka Julia Sari, Mohamad Adam, and Rina Tjandrakirana

Economic Faculty, Sriwijaya University, South Sumatera, Indonesia

Keywords: Audit Quality, Audit Rotation, Audit Tenure, Workload

Abstract: This research is aims to study the Influence of audit rotation, audit tenure, and workload on audit quality.

The population of this research are all of the Consumer Goofs Sector Manufacturing companies period

2012-2016. Sampling done by using purposive sampling method, and collect 26 companies for use in this

research. This research using regression panel method that show the audit rotation, audit tenure, and

workload can explain and effect 42,63% of audit quality, while 57,37% of audit quality caused by other

factors that out of the model. Based on the results of research can be concluded that audit rotation and audit

tenure had positive and significant impact on Audit Quality, that is, by doing audit rotation can improve

audit quality and the longer of audit tenure can improve audit quality. Workload had a negative and

insignificant relationship to Audit Quality, meaning that the higher the workload pressure, the audit quality

will decrease.

1 INTRODUCTION

The consumer goods sector company is one of

the interesting sectors to invest. The consumer goods

sector company is a company that provides goods

that are widely used by consumers or the public and

is a sector supporting economic growth because the

sector is growing quite rapidly even when the

monetary crisis occurred the consumer goods sector

became one of the economic savior. (Kontan.co.id,

2016). Decision making of investment be able to

maximize the investment value flowed by investors

can be generated from reading the financial

statements.

The financial statement is an important means of

assessing the financial position of a company

(Hartono and Wahyuni, 2016). The financial

statement is useful in making investment business

decisions which in turn can maximize the value of

investments from investors. To ensure that financial

statement is presented fairly, an independent auditor

is required. Sussanto et al. (2012) stated that auditor

plays an important role in bridging the interests of

investors as users of the financial statements and

companies as providers of the financial statements.

One of the cases that happened to Toshiba in

2015 is one example of companies that manipulate

financial statement which involve auditors in the

fraud, causing the financial statement is not

qualified. The public accounting firm which audit

the financial statement of Toshiba was Ernst &

Young (EY). EY has been working together to audit

for Toshiba for 12 years from 2002 to 2014 was

unable to find and report that this company was

cheating. Because of that farud, Japan's financial

regulator fined the affiliate Ernst & Young for 2.1

billion yen ($ 17.4 million) after the agency failed to

see the deviation of accounting standards at Toshiba

and suspend Ernst & Young in taking a new

business contract for three months (Kompas.com,

2016 in Tresnawaty and Kurniasyah, 2018).

The Toshiba case above shows that the length of

Ernst & Young's audit impacted the declining audit

quality. For 12 consecutive years Toshiba has never

rotated the public accounting firm used by the

company, resulting in a close relationship between

the public accounting firm and its client. The

existence of this phenomenon illustrates that there

are still many financial statements that are not

qualified. Although using the services of the external

auditor but the auditor is not able to disclose that

258

Julia Sari, E., Adam, M. and Tjandrakirana, R.

The Inﬂuence of Audit Rotation, Audit Tenure and Workload on Audit Quality at Consumer Goods Sector Manufacturing Companies listed in Indonesia Stock Exchange.

DOI: 10.5220/0008439102580266

In Proceedings of the 4th Sriwijaya Economics, Accounting, and Business Conference (SEABC 2018), pages 258-266

ISBN: 978-989-758-387-2

leads to decreased audit quality. The bankruptcy of

Enron and major corporations in the United States,

which triggered by manipulation of bookkeeping

became the turning point for the emergence of

stricter regulations on public accounting firms

(Irianto, et al. (2014)).

Ishak, Perdanna, and Widjayanto (2015) stated

the influence of audit rotation on audit quality give a

positive and negative arguments. Audit Rotation

aims to increase audit quality, with asumption the

longer the relationship between auditor and client

will decrease the independency of auditor. O (2015)

stated that the audit rotation consists of rotation of

a public accounting firm and auditor. Carey and

Simnett (2006) research show a significant negative

effect between the obligation of audit rotation and

audit quality.

Audit rotation can affect audit quality (Isaac,

Perdanna and Widjayanto, 2015). The effect of audit

rotation on audit quality provides some positive and

negative arguments. The former auditor can not

provide an understanding of the client to the new

auditor, before engaging the audit engagement then

the new auditor takes time to understand the client's

condition so that auditor rotation can not affect audit

quality. Firth, et al (2012) found that in audit

rotation regulation is associated with an increased

likelihood of modified audit opinion in terms of

audit quality. In realizing the users' trust in the

financial statement, the company seeks to improve

the quality of audited financial statements. Some

developed countries like in the EU have implement

mandatory rotation of audit firms. The following is

also the case with Developing Countries like

Indonesia and Malaysia.

The auditor's rotation aims to improve the quality

of the audit, assuming that the longer the

relationship between the auditor (both the audit

partner) and the public accounting firm with the

client will reduce the auditor's independence. O

(2015) stated that audit rotation consists of rotation

of public accounting firm and auditor rotation. Carey

and Simnett (2006) reported a significant negative

relationship between audit rotation regulation and

audit quality.

The length of the engagement between the

auditor and the public accounting firm with the

client is called audit tenure. Supposedly, the

engagement between the auditor and then client can

get the optimal audit quality results. In short, the

audit tenure makes the auditor's understanding of the

company is still not specific. However, over audit

tenure can also have an impact on the auditor's

independence and objectivity due to the familiarity

between the auditor and the company management.

The negative relationship between audit rotation

and audit tenure is supported by research conducted

by Davis et al. (2002), Siregar, et al. (2011), Isaac

(2015) and Fitriany (2015) which stated that audit

tenure and audit rotation had a negative impact on

audit quality, and supported by research conducted

by Cameran et al (2008) and Isaac (2015) audit

rotation had a negative effect on audit quality, as

more frequent rotations will result in lower audit

quality.

Auditor has a responsibility not only to pay

attention to the number of clients, but also need to

pay attention to the limited time to complete the

audit process. Decree of BAPEPAM

No.36/PM/2003 has stipulated the obligation of each

issuer to submit audited financial statements at the

latest the end of the third month (90 days) after the

date of the financial statement. Surely this will be a

"busy season" for auditors. According to Lopez and

Peters (2012) workload is a "busy season" that

occurs at the beginning of the year because most

companies have a fiscal year ending in December.

Adityasih (2010) argued that the number of clients

(audit capacity) handled by the auditor will affect

the quality of the resulting audit. The large number

of clients raises a high workload for the auditor and

may degrade the auditor's ability to discover material

faults and report violations in the client's accounting

system.

Based on the above descriptions, previous

studies and different results of the research, the

researcher was interested in conducting research

entitled "The Influence of Audit Rotation, Audit

Tenure and Workload on Audit Quality at

Consumer Goods Sector Manufacturing

Companies listed in Indonesia Stock

Exchange"with the period or year 2012-2016.

2 LITERATURE REVIEW

2.1 Agency Theory

The agency theory developed by Jensen and

Meckling (1976) which explains the conflict of

interest between management as the agent and the

owner as principal. Colifa and Suryono (2015) stated

Agency Theory explains the conflict between

managers as agents with agency relationships, when

a contract exists between one party, the principals

with another, the manager (agent). In contract,

manager is bound to provide services to

owners/principals. Principals want to know all

The Inﬂuence of Audit Rotation, Audit Tenure and Workload on Audit Quality at Consumer Goods Sector Manufacturing Companies listed

in Indonesia Stock Exchange

259

information including management activities, related

to investment or funds in the company. This is

performed by requesting an accountability report on

the agent (management). Based on these reports the

principal can assess management performance.

Fitriany (2015) stated that there is a motivation

of self-interest which in reality manager does not

always act as what the owner desires. One of the

causes is moral hazard (the manager's desire to act

for personal gain). On the other hand, there is an

agency problem from the auditor side in which the

auditor has an interest in maintaining and improving

the audit service revenue by satisfying the client's

wishes, especially long-term clients. This is

performed in order to ensure the continuity of the

audit engagement so that the auditor's earnings are

guaranteed. The incentives to work with cheat

management come from the economic dependence.

Thus, in the economic interest, a long-term audit

engagement will lead to closeness and loyalty

between the auditor and the client. This reduces the

audit objectivity and decreases the auditor's

independence and is influencing audit quality.

2.2 Recilience Theory

Resilience was first formulated by Block with

the name ego-resilience, which is defined as a

general ability that involves high and flexible self-

adjustment when faced with internal or external

pressure (Klohen, 1996). Xianon and Zhang (2007)

state that resilience is used to express individual

capabilities to survive / survive and be able to be

adapted in a state of stress and suffering. The theory

of resilience in individuals is defined as the human

capacity to deal with, overcome and even change

due to traumatic experiences (Schoon, 2006).

Auditors are not only required to work

professionally, but also must complete the task

according to the exact time. Quality report demand

with limited time is a separate pressure for the

auditor. Dhermawan and Rasuli (2018) pressure is a

challenge that must be faced by an auditor in the

form of workload. Hansen et al. (2007) states that

the workload is an audit of capacity stress, namely

the pressure faced by the auditor in relation to the

number of audit clients he handles during a period.

2.3 AUDIT QUALITY

Audit quality according to Arens et al (2010) is

how well the audit detects and reports material

misstatements in the financial statements. De Angelo

(1981) defined audit quality as the possibility that an

auditor will find and report an infringement that

exists within client's accounting system.

Mgbame et el. (2012) concluded that the higher

the quality produced and perceived, the more

credible financial statements, thereby increasing the

user's confidence in financial statements. Company

management also try to served the best for company

by choosing an auditor that can reflect the image of

a good manager in the viewpoint of investor. So

hopefully the investor will invest in the company

and will make a good image for the principal, this

also supported by the good quality of audit. Audit

quality is the negative value of the discretionary

accrual value. Discretionary accruals measured

using the Kaznik (1999) model is illustrated as

follows:

DACC

= TACC

- NDACC

Description:

TACC

= total accruals of I Company in t period

NDACC

= non discretionary accruals

2.4 Audit Rotation

Irianto (2014) stated that the bankruptcy of

Enron and major corporations in the United States

caused by manipulation of bookkeeping. This

became the turning point for the emergence of more

stringent regulations on Public Accounting Firm.

One of the phenomenal regulations is the Sarbanes-

Oxley Act, which regulates audit rotation.

The inclusion of the regulation requiring audit

rotation into the Sarbanes-Oxley Act is the result of

the consideration that very long time audit by an

independent auditor on one client will have the

potential to create a close relationship between the

auditor and the management of the audited client,

which may negatively impact independence,

reliability and quality of the audit so as to contribute

to the occurrence of financial scandals in the United

States (Irianto et al. (2014)). Audit rotation also have

good benefit such as to prefent and increase auditor

independency, audit quality, sharing knowledge and

profit, and to prefent collusion between auditor and

client. Good audit quality reflecting a good financial

report.

Siregar et al. (2011) analyzed the effect of audit

rotation and audit tenure on audit quality and

showed that auditor rotation will reduce audit

quality. The test results indicated that there need

rules to overcome the negative effect of long audit

assignment period, but the current audit rotation

rules do not seem to be very effective. Fitriany

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260

(2015) proved that in the period before regulation,

there was no influence on the period of auditing on

audit quality. However, after the regulatory period,

the lst period of audit has a convex relationship with

audit quality from a neutral point of view to

timeliness. This study also found that in general

there was no effect of public accountant rotation

with audit quality. Ishak et al. (2015) found that

audit rotation has a negative effect on audit quality.

Audit rotation refers to research conducted by

Siregar (2011). This variable uses dummy variable,

where:

1: for the company which perform audit rotation

0: for the company which do not perform audit

rotation

2.5 Audit Tenure

Tenure is the period of engagement between the

auditor and the client regarding audit services as

agreed as the term of the auditor's relationship with

the client. Mautz and Sharaft (1961) stated in

Fitriany (2015) that the length of the relationship

between the auditor and then client will affect the

auditor's independence because the auditor's

objectivity will decrease over time. Munif (2013) in

his research argued that Audit Tenure itself is related

to several things such as auditor competence,

economic incentives, audit quality and auditor

independence.

There are two conflicting opinions about the

relationship between tenure and audit quality

(Fitriany, 2015). The first opinion says that the

period of the audit assignment is negatively related

to the quality of the audit with the argument that the

longer the audit period, the auditor's relationship

with the client will be closer so that it will affect the

quality of audit (Chi and Huang (2005), Davis et al.

(2002), Geiger and Raghunandan (2002)). Al-

Thunaebat (2011), Siregar (2011), Mgbame (2012),

Blandón and Bosch (2012), found that audit tenure

can reduce the audit quality. The second opinion

says that the period of the audit assignment is

positively correlated with the quality of the audit. In

other words, the longer the tenure, the audit quality

will increase (Myers et al. (2003)). Audit tenure

measured by measurement in the study of

Althuneibat et al. (20110 that is:

TEN = ∑ the number of years a public accounting

firm audited the same company

2.6 Workload

Workload is a working condition that can

precede and affect work stress levels. Setiawan and

Fitriani (2011) stated that the Workload shows how

much work faced by an auditor. Pranoto and

Retnowati (2015) stated that the workload is an

action that aims to determine the amount of time

required by employees to complete a job.

Workload can be seen from the number of clients

to be handled by an auditor or the limited time

available to carry out the audit process. Workload is

termed as an audit capacity stress that is the pressure

faced by the auditor in terms of the number of audit

clients that must be handled.

Hansen et. al. (2007) analyzed the effect of audit

capacity stress on audit quality. The results of the

research showed that a high level of audit capacity

stress in a public accounting firm can reduce audit

quality. Setiawan and Fitriany (2011) also conducted

research on the effect of workload on audit quality,

where the results showed that the workload had a

negative effect on audit quality. The same results

were also shown by research conducted by Lopez

and Peters (2012), where in the research it was

stated that during "busy season" the company

relatively reduced audit quality. However, different

research results were found in research conducted by

Febrian Adhi Pratama Ishak, Halim Dedy Perdana

and Anis Widjajanto (2015), which stated that the

workload had a positive effect on audit quality. In

this case how a public accounting firm maintains its

professionalism in conducting audits and improving

audit quality issued.

This study follows Hansen et al. (2007),

Setiawan and fitriany (20110 and Ishak et al. (2015)

which measured workload based on audit capacity

stress with the following formula:

W = ∑ number of clients in KAP

∑ number of partners in KAP

Based on the theories and previous

researches reviewed in this study, then the

framework in jis research can be described as

follows;

Independent Variables

(+) Dependent Variables

Dependent Variables

(+)

(-)

Audit Rotation (X

)

Audit Tenure (X

)

Workload (X

)

Audit

Quality (Y)

The Inﬂuence of Audit Rotation, Audit Tenure and Workload on Audit Quality at Consumer Goods Sector Manufacturing Companies listed

in Indonesia Stock Exchange

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3 METHODS

In this study the data used was secondary data

which is data obtained by Indonesia Stock Exchange

(IDX) that can be obtained BEI website that is

www.idx.co.id. Secondary data in the form of data

Financial Statement and Annual Report of

manufacturing company of consumer goods sector.

Data of public accountants and registed public

accountant offices (active) are obtained from

directory IAPI and website of the financial ministry-

the center of financial profession development

(PPPK).

The population in this study amounted to 36

consumer goods sector manufacturing companies,

then sampled as many as 26 companies with a period

of 5 years (2012-2016) so as to obtain as many as

130 samples/observations used in research. The

criteria in sample selection are as follows:

• Companies were listed in the

period 2012-2016.

• Have complete financial statement

for overall measurement of variables.

• Use Indonesian Rupiah currency

in the financial statement.

Methods of data analysis using descriptive

statistics, classical assumption test and hypothesis

test that the calculation was performed by using

Eviews software. The purpose of this analysis was to

know the influence of audit rotation (X

), audit

tenure (X

) and workload (X

) on audit quality (Y).

Wanner and Pevalin (2005), stated that panel

regression is a set of techniques to model the effect

of explanatory variables on response variables in

panel data. Panel data is data that is the result of

observation on several individuals (unit of the cross

table) each observed in several consecutive time

periods (time unit) (Baltagi, 2005). Panel data was

first introduced by Howles in 1950. Panel data is a

combination of cross-table data and time series data.

The cross-table data is a data consisting of a number

of individuals collected at a given time. While time

series data is data consisting of one individual but

covering some period of time.

Generally using panel data will produce different

intercept and slope coefficients on each individual

and every time period. Based on the assumption of

influence used in panel data regression, the panel

data regression model is divided into 3, ie Common

Effect model (CEM), Fixed Effect model )FEM),

and Random Effect Model (REM). Considering

panel data is a combination of cross table data and

time series data, the general form of panel data

regression model is as follows:

……(1)

Description:

= Observation of the panel unit of

the cross-table data of the i-th on t-th time

α = Intercept

β = Slope coefficient for all units

= The independent variable for the

i-th cross-table data of time t

= Error value in the i-th cross-table

data of time t

ί = cross-section unit of N number

t = number of T time

To choose the most appropriate model which

used in processing panel data, there re several tests

that can be done such as chow test, hausman test and

lagrange multiplier test (LM Test).

4 FINDINGS

This research is aims to study the Influence of

audit rotation, audit tenure, and workload on audit

quality of the Consumer Goods Sector

Manufacturing companies that listed in Indonesia

Stock Exchange. The data that used in this researh is

secondary data from financial report of 26 Consumer

Goods Sector Manufacturing companies period

2012-2016. Then we doing descriptive analysis and

quantitative to test the influence of audit rotation,

audit tenure, and workload on audit quality of the

Consumer Goods Sector Manufacturing companies.

Based on descriptive analysis on audit quality

variable, we can see from 26 companies the

maximum value of audit quality is 1,061800 or

106,18% from PT. Wilmar Cahaya Indonesia, Tbk

(CEKA) period 2016. The minimum value is -

2,477920 or -247,79% from PT. Sekar Bumi,Tbk

(SKBM) period 2012. Average value of audit quality

variables from sample companies is -0,267782 or -

26,77% with 0,532046 or 53,20% standard

deviation.

Based on descriptive analysis on audit rotation

variable, we can see maximum value audit rotation

is 1,000000 from 10 companies who perform audit

rotation. Minimum value audit rotation is 0,000000

from 16 companies that did not perform audit

rotation in the company. The average value from

audit rotation is 0,115385 times with a standard

deviation of 0,320721.

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262

Based on descriptive analysis on audit rotation

variable, it show that maximum value of audit tenure

from population sample companies is 600% or

6,000000. The minimum value is 100% or 1,000000

from 10. The average value from audit tenure is

3,384615 with a standard deviation of 1,567028.

Based on descriptive analysis on audit rotation

variable, it show that maximum value of workload is

131,00000. The average value from workload is

61,74755 with a standard deviation of 24,25648.

The CEM model estimation is as follows:

AQ = -1.244771 + 0.862735 RA + 0.263616 TEN +

ε ………………….. (2)

Based on the above model equations, it can be

seen that the variables which influence audit quality

are audit rotation and audit tenure, where the

coefficient value of each independent variable is

positive, that is 0.862735 for audit rotation

coefficient and 0.263616 for audit tenure coefficient.

The FEM estimation is as follows:

AQ = -1.226644 + 0.841073 RA + 0.281634 TEN +

ε …………………… (3)

Based on the above model equations, it can be

seen that the variables which influence audit quality

are audit rotation and audit tenure, where the

positive coefficient value is 0.841073 for audit

rotation coefficient and 0.281634 for audit

coefficient tenure. This means that if the audit

rotation value increases by 1%, then the audit quality

will increase by 0.84% and if the audit tenure rises

by 1%, then the audit quality value will also rise by

0.281634.

The REM estimation is as follows:

AQ = -1,244771 + 0,862735 RA + 0,263616

TEN + ε …………………….. (4)

Based on the above model equations, it can be

seen that the variables which influence audit quality

are audit rotation and audit tenure, where the value

of positive coefficient. This means that if the audit

rotation value increases by 1%, then the audit quality

will also increase by 0.86% and if the audit tenure

increases by 1% then the audit quality value will

also increase by 0.26%.

Based on the chow hausman and LM test,

the CEM estimation was chosen. And based on F

test obtained p-value which is less than the value of

significance level (α=0,05). This means independent

variables jointly affect the dependent variables. And

based on t test shows that individually/partially the

audit rotation and audit tenure have a significant

effect on audit quality. Workload do not have a

effect on audit quality.

From the total observation of the pooled data of

130 that has been estimated, obtained information

that jointly the audit rotation, audit tenure and

workload variables had a significant influence on

audit quality. The evidence can be seen from the f-

calculation value of 31.20497 with the probability

value f-calculation of 0.0000. Where the value is

smaller than the value α = 0.05 (5%)

Coefficient of determination (R2) which

has a value of 0.426268. The value reflects the

squared value of the correlation coefficient R. The

magnitude of the coefficient of determination value

is equal to 42.6%. This figure explains that the

contribution of audit rotation, audit tenure and

workload variables in explaining audit quality is

only 42.6%, while 57.4% is explained by other

variables outside the model.

While the value of adjusted-R2 is the

coefficient of determination (R2) that has been

correlated with the standard error value with a value

of 0.412608. Meanwhile, to determine that the

regression model used is valid, it can be seen from

the comparison of standard error value (S.E.) of the

regression model and the standard value of division

response (S.D). The comparison is proved by the

value of S.E. 0.407768 is smaller than S.D.

0.532046 which means that the regression model is

valid as the predictor model.

Partially indicates that audit rotation

variables and audit tenure have a significant

influence on audit quality. This is evidenced by the

probability value of t-calculation is smaller than the

value of α (significant level) of 0.05 (5%), that is

0.001 <0.05. Meanwhile, the workload had no

impact on audit quality because the probability of t-

calculation is greater than the value of α = 0.05, that

is 0.8741> 0.05.

The general panel data regression model as

follows.

AQ = -1.244771 + 0.862735 RA + 0.263616 TEN –

0.000240 WL + ε ……………. (5)

The above estimation results can be explained

that the influence of independent variables of audit

rotation, audit tenure and workload to the dependent

variable that is audit quality is as follows:

• Audit Rotation (RA)

Statistically dominant influence on independent

variables can be proved by looking at coefficient and

t-calculation probability values such as audit rotation

variables with t-calculation value of 6.420970 and

having a positive sign with regression coefficient

The Inﬂuence of Audit Rotation, Audit Tenure and Workload on Audit Quality at Consumer Goods Sector Manufacturing Companies listed

in Indonesia Stock Exchange

263

value of 0.862735 which means if audit rotation

increases of 1% will lead to an audit quality increase

of 0.86%, assuming other variables are constant.

Audit rotation has a positive effect on audit quality,

that is, audit rotation can improve audit quality.

• Audit Tenure (TEN)

Audit tenure has t-calculation probability value

including audit rotation variable with t-calculation

value of 9.509330. The variable also has a positive

sign with regression coefficient value of 0.263616

which means if Audit Tenure rises 1% it will cause

AQ increase of 0.26%, assuming other variables are

constant. Audit Tenure has a positive and significant

relationship to Audit Quality, meaning that Audit

Tenure will improve audit quality. This is in

accordance with research conducted by Fitriany

(2015) which also stated that audit tenure had a

positive relationship with audit quality.

• Workload (WL)

The workload has a negative and insignificant

relationship to the Audit Quality with the existing

regression coefficient of -0.000240, meaning that if

the Workload variable increases by 1% it will

decrease the Audit Quality by 0.0002%. The higher

the workload pressure, the audit quality will

decrease.

AUDIT ROTATION (RA) POSITIVELY

INFLUENCES AUDIT QUALITY

The results of hypothesis testing indicate that

audit rotation has a significant effect on audit quality

with a positive relationship direction. That is, audit

quality will increase along with the audit rotation.

Audit rotation regulation increases auditor

responsibility by providing good capability in

limiting earnings management actions carried out by

client company management, resulting in high audit

quality. Audit rotation is one solution in overcoming

the problem of auditor independence because the

application of audit rotation is appointed to maintain

audit quality because it can avoid a decline in

auditor independence.

The results of this study are consistent with the

research conducted by Ishak, Perdana and

Widjayanto (2015) stating that the regulations

regarding auditor rotation aim to improve audit

quality, assuming that the longer the relationship

between auditors (both audit partners / AP) and the

Public Accounting Firm (KAP ) with its clients will

reduce auditor independence. According to and

Firth, et al (2012) Rotation audits can also affect

audit quality. This is indicated by the auditor's

ability to detect discretionary accruals carried out by

management. Although in reality in this study there

are still few companies that routinely conduct audit

rotations annually

AUDIT TENURE (TEN) POSITIVELY

INFLUENCES AUDIT QUALITY

Agency issues from the auditor's side where the

auditor has the interest of maintaining and increasing

the income of his audit services by fulfilling the

wishes of the audit client, especially long-term

clients. A long tenure audit will create closeness and

loyalty between the auditor and the client. This will

reduce audit objectivity and reduce auditor

independence and is feared to affect audit quality.

The results of hypothesis testing indicate that

audit tenure has a significant effect on audit quality

with a positive relationship direction. That is, the

length of the Tenure Audit can improve audit

quality. This is in accordance with the research

conducted by Myerset al. (2003), Chen et al. (2008)

and Fitriany (2015) who also stated that audit tenure

has a positive relationship with audit quality, the

longer the audit assignment (audit tenure), the better

the audit quality. The length of the audit tenure will

encourage the creation of business knowledge for an

auditor. This knowledge can be used to design

effective audit programs and create quality audit

reports.

WORKLOAD (WL) NEGATIVELY

INFLUENCES AUDIT QUALITY

Resilience theory is defined as the human

capacity to deal with, overcome and even change

due to traumatic experiences that occur to him.

When someone gets a disturbance in life, they

overcome their feelings in a healthy way by not

feeling depressed, hurt, angry, confused and other

traumatic experiences as permanent. They will rise

to the many pressures that exist and make it a

challenge and then make it an experience to be

better.

Auditors are not only required to work

professionally, but also must complete the task

according to the exact time. Quality report demand

with limited time is a separate pressure for the

auditor. The auditor must be able to maintain his

professionalism in conducting audits so that the

audit report issued is of high quality.

The results showed that Workload has a negative

and not significant relationship to Audit Quality with

an existing regression coefficient of -0,000240,

meaning that if the Workload variable increases by

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1% it will reduce Audit Quality by 0,0002%. This is

consistent with the research conducted by Lopez

(2005), Hansen et al. (2007), Setiawan and Fitriany

(2011), Lopez and Petters (2012) and Persellin,

Schmidt and Wilkins (2014) found that the audit

process carried out when there is a workload

pressure will result in lower audit quality compared

to when there is no workload pressure. Overlapping

audit assignments will create a separate workload for

the auditor.

5 CONCLUSION

Based on the results of research can be

concluded that audit rotation and audit tenure had

positive and significant impact on Audit Quality,

that is, by doing audit rotation can improve audit

quality and the longer of audit tenure can improve

audit quality.

Workload had a negative and insignificant

relationship to Audit Quality, meaning that the

higher the workload pressure, the audit quality will

decrease.

LIMITATION AND SUGGESTION

For company, Companies should routinely

perform audit rotation. This is because in accordance

with the results of research conducted that with the

audit rotation it will be able to improve the audit

quality. Companies should follow the regulations

issued on the limitation of audit tenure, that is for 6

consecutive years in accordance with the PMK No.

17 of 2008.

For further research, Subsequent research is

expected to add other research variables beyond

audit Rotation, Audit Tenure and Workload that can

influence the Audit quality. Subsequent research

may also use samples on other types of companies

with different periods.

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