Factors Affecting Audit Quality: Empirical Study on Public

Accountants in Malang

Moh. Fakhri Siddiqi

, Puji Handayati

, Niken Nindya Hapsari

Universitas Islam Negeri (UIN) Maulana Malik Ibrahim Malang”

Universitas Negeri Malang

”

Graduated School of Universitas Negeri Malang

Keywords : Education of level, Competency, Motivation, Fee, Professionality, Audit Experience, Audit Quality.

Abstract : This ”research aims to examine education level influence, competency, motivation, fee, professionality,

and audit experience on audit quality. ” The common problem in this research is about the users of finances

report base their decision on the result of audit finance report, with the result that the information inside

finance report has to be free from wrong material displayed and not to mislead. ”The variables in this

research consist of education level (X1), competency (X2), motivation (X3), fee (X4), professionality (X5),

audit experience (X6), and audit quality (Y). This ”research takes population on auditor from public

accountant office—Kantor Akuntan Publik (KAP), in Malang city which consists of 8 KAP. ” From its

population mentioned above, only 6 KAP are willing to fill the questionnaire. The spread-questionnaire is

amount 40 questionnaires and returned was 39 questionnaire. This research analyzes data using doubled

linear regression method by SPSS application (Statistical Product and Service Solution) version 23.The

result of this research shows that the influence education level, competency, motivation, fee, professionality,

and audit experience simultaneously influence audit quality. Whereas, partially, the result points out that (1)

education of level influence on audit quality, (2) competency indicates on audit quality, (3) fee are also the

point influencing audit quality, (4) motivation does not influence in audit quality, (5) professionality does

not influence on audit quality, and (6) audit experience is not the point on influencing the audit quality.

1 INTRODUCTION

The profession of public accountant is a public trust

profession, from the public accounting profession

the public expects a free and impartial assessment of

the information presented by company management

in financial statements, where the public accounting

profession is responsible for raising the level of

reliability of the company's financial statements, so

that the public obtains financial information reliable

as a basis for decision making (Mulyadi, 2014).

Every profession is always associated with the

quality of services it produces, including public

accountants. Audit quality is defined as a joint

probability that the auditor will find violations that

occur in the client's accounting system and report it

in audited financial statements. Based on the

Standard Profesional Akuntan Publik (SPAP), audits

carried out by these auditors can be quality if they

meet the requirements of auditing standards. Quality

refers to standards relating to criteria or measures of

quality of implementation (Febrianto, 2009).

The users of financial statements base their

decisions on financial statements of audit results

than that the information contained in the financial

statements should be free from material

misstatement and not misleading. Some cases of

audit failures or financial scandals, both outside and

inside the country are still in the public spotlight,

ranging from the Enron, WorldCom, Tyco cases and

so on in the United States, to several domestic cases

such as indications of gross violations by 10 KAP

when auditing liquidated banks in 1998, leading to

action taken by Ikatan Akuntan Indonesia (IAI) and

other cases which raised many questions about

competence and professionalism on audit quality by

public accountants (Septriani, 2012).

One example of a case of audit failure that

occurred in Indonesia was the error in recording PT.

Kimia Farma Tbk in 2001. The Public Accountant

Office (KAP) Hans Tuanakotta & Mustofa (HTM)

Siddiqi, M., Handayati, P. and Hapsari, N.

Factors Affecting Audit Quality: Empirical Study on Public Accountants in Malang.

DOI: 10.5220/0008785600560061

In Proceedings of the 2nd International Research Conference on Economics and Business (IRCEB 2018), pages 56-61

ISBN: 978-989-758-428-2

was allegedly involved in the inflation action.

Indeed, recently, Kimia Farma and HTM corrected

the financial statements, they reasoned that there had

been a recording error. A reason that violates the

common sense of society because it is known that

KAP Hans Tuanakotta & Mustofa are experienced

KAP and enter into the big four. Based on

BAPEPAM's investigation, it was stated that the

KAP that had audited PT. Kimia Farma Tbk has

followed applicable audit standards but failed to

detect fraud (Simbolon, 2002).

Phenomena that occur both from within and

outside the country, as well as the existence of

similar studies with different variables and locations

above make the writer interested in conducting

research on "The Influence of Level of Education,

Competence, Motivation, Fee, ”Professionalism and

Audit Experience on Audit Quality"”study empirical

at Kantor Akuntan Publik (KAP) in Malang.

2 LITERATURE REVIEW

2.1 Level of Education

The level of formal education is one very important

factor in supporting the competence of an auditor in

carrying out his duties. By having a good formal

education, can improve human resources and will

affect the audit results (Jurnaedi, 2014).

2.2 Competence

Auditor competence is a qualification required by

the auditor to carry out audits correctly and in

conducting audits, an auditor must have a good

personal quality, adequate knowledge, and special

expertise in the field (Rai, 2008).

2.3 Motivation

Suwandi (2005) argues that in the context of the

organization, motivation is the integration of

organizational needs with personal needs. This will

prevent the occurrence of tensions/conflicts so that it

will lead to the achievement of effective

organizational goals.

2.4 Fee

Audit fees as the number of costs dependent, among

others, the risk of assignment, the complexity of

services provided, the level of expertise needed to

carry out these services, the cost structure of the

KAP concerned and other professional

considerations (Agoes, 2012).

2.5 Professionalism

According to the Big Indonesian Dictionary (2005),

professionalism is the quality, quality, and behavior

that are characteristic of a profession or professional

person. In conducting audits and preparing audit

reports, the examiner must use his professional skills

carefully and carefully as stated in the first general

standard in the Standard Profesional Akuntan Publik

(SPAP) established by the Indonesian Institute of

Accountants (Jusup, 2014).

2.6 Audit Experience

Experienced auditors are auditors who have a better

understanding. They are also better able to provide

reasonable explanations for errors in financial

statements and can classify errors based on audit

objectives and the structure of the underlying

accounting system (Agoes, 2012).

2.7 Audit Quality

Himawan and Emarila (2010) argue that audit

quality is a systematic system of quality inspection

processes carried out by internal or external quality

auditors or audit teams. “From the definition of audit

quality above, it can be concluded that an auditor is

required to give his opinion about the fairness of

financial statements made by management in the

form of quality audit reports by maintaining various

audit quality attributes. “

2.8 Islamic Theory

The Islamic explanation of the audit is based on the

Al-Quran letter Ash-Shu'ra: 181-184:

Meaning: “Give full measure, and be not of those

who give less (than the due). And weigh with the

true balance. Wrong not mankind in their goods, and

do not evil, making mischief, in the earth. And keep

your duty unto Him Who created you and the

generations of the men of old“ (Ash-Shu'ra: 181-

184).

Factors Affecting Audit Quality: Empirical Study on Public Accountants in Malang

3 METHODS

This type of research is explanative quantitative

research. Quantitative research is a method to test

certain theories by examining the relationships

between variables. This variable can be measured so

that data consisting of numbers can be analyzed

based on statistical procedures (Noor, 2010). This

research was carried out at the Public Accountant

Office (KAP) in Malang with the aim of making it

easier to get information. This study uses the Simple

Random Sampling technique. The type of data used

in this study is primary data. In this study, the

authors used data collection techniques in the form

of questionnaires. The analysis technique used in

this study is descriptive statistics, quality tests,

classical assumption tests, and hypothesis testing.

4 RESULTS AND DISCUSSION

4.1 Validity Test

The results of the question about the education level

variable to the respondent showed a correlation

value of 745 for the first question, the correlation

value of 605 for the second question, the correlation

value of 880 for the third question. The significance

for each question is 000 with valid results. The

results of the question about the competency

variable to the respondent showed a correlation

value of 874 for the first question, 911 for the

second question, 880 for the third question, 833 for

the fourth question. The significance for each

question is 000 with valid results. The result of the

question about the motivation variable to the

respondent shows a correlation value of 822 for the

first question, the correlation value of 775 for the

second question, the correlation value of 699 for the

third question, the correlation value of 785 for the

fourth question. The significance for each question

is 000 with valid results. The result of the question

about the fee variable to the respondent shows the

correlation value 725 for the first question, the

correlation value 688 for the third question, the

correlation value 862 for the fourth question. The

significance for each question is 000 with valid

results. The results of the questions about the

professionalism variable to the respondents showed

a correlation value of 625 for the first question, the

correlation value of 784 for the second question, the

correlation value 538 for the third question, the

correlation value 538 for the fourth question. The

significance for each question is 000 with valid

results. The result of the question about the audit

experience variable to the respondent shows the

correlation value 787 for the first question, the

correlation value 882 for the second question, the

correlation value 879 for the third question, the

correlation value 459 for the fourth question. The

significance for each question is 000 with valid

results. The results of the questions about the audit

quality variable to the respondents showed a

correlation value of 674 for the first question, 754

for the second question, 599 for the third question,

the correlation value 664 for the fifth question, the

correlation value 523 for the sixth question. The

significance for each question is 000 with valid

results.

4.2 Reliability Test

Table 1: Reliability Test.

Cronbach's

Alpha

Keterangan

Level of

Education

667 Reliable

Competence 895 Reliable

Motivation 729 Reliable

Fee 698 Reliable

Professionalism 472 Unreliable

Audit

Experience

748 Reliable

Audit Quality 896 Reliable

(Source: Primary Data Processed, 2017) “

4.3 Normality Test

The results of normality test in the table above

obtained K-S value is 0.716 and a significant level is

0.685, which means the significance of> 0.05. This

gives an illustration that the distribution of data does

not show deviations from the normal curve, which

means that the distribution of data has met the

assumption of normality.

4.4 Multicolinearity Test

Table 2: Multicolinearity Test.

Model Collienarity Statistics

Tolerance VIF

Level of

Education

.636 1.571

Competence .838 1.193

Motivation .802 1.247

Fee .593 1.686

Professionalism .829 1.207

IRCEB 2018 - 2nd INTERNATIONAL RESEARCH CONFERENCE ON ECONOMICS AND BUSINESS 2018

Audit Experience .911 1.097

(Source: Primary Data Processed, 2017) “

Based on the table above it can be seen that

tolerance number of independent variable has a

value greater than 0.1 which means that there is no

correlation between independent variables.”

4.5 Heteroscedasticity Test

The glesjer test results show that the

significance probability of the education level

variable is 0.016 (smaller than 5%) which means

that the regression model loosens heteroscedasticity.

The significance probability of the competency

variable is 0.498 (greater than 5%) which means that

the regression model does not preclude

heteroscedasticity. The significance probability of

the motivation variable is 0.855 (greater than 5%)

which means that the regression model does not

preclude heteroscedasticity. The significance

probability of the variable fee is 0.930 (greater than

5%) which means that the regression model does not

preclude heteroscedasticity. The probability of

significance of the professionalism variable is 0.097

(greater than 5%) which means that the regression

model does not preclude heteroscedasticity. The

significance probability of the audit experience

variable is 0.084 (greater than 5%) which means that

the regression model does not preclude

heteroscedasticity.

4.6 Autocorrelation Test

Based on the results of the above analysis shows that

Durbin Watson obtained 1.333 with a sample of 39,

the number of variables 6, then formulated “dl < dw

< 4-du ie 1.161 < 1.333 < 1.858“. The conclusion is

that du approaches number 2, so there is no

correlation in the regression model.

4.7 Multiple Regression Test

To facilitate reading the results of multiple

regression tests, the regression model equation will

be used. The following is a description of the results

of multiple regression testing and output of the test

table using the help of SPSS version 16 in the form

of output model summary, ANOVA (F test), and

coefficient (t test).

Y = 16,150 + 1,906 + 0,998 + 0,638 + 1,592 +

0,934 + 0,693 + e (1)

From the above equation, it can be interpreted

as follows:

Regression model listed constant value of

16,150 can be interpreted if the variables outside

the

model will still improve audit quality by 16,150

units. Variable X1 is the level of education with

unstandardized coefisients (B) value of 1.906 which

means that the education level has a positive effect

on audit quality. This shows that when the audit

quality has increased by a unit, then the level of

education will also experience an increase of 1,906

units. The X2 variable is the competence with

unstandardized coefisients (B) value of 0.998 which

means that competence has a positive effect on audit

quality. This shows that when audit quality has

increased by a unit, then competence will also

increase by 0.998 units. X3 variable is motivation

with unstandardized coefisients (B) value of 0.638

which means that motivation does not have a

positive effect on audit quality. The variable X4 is

the fee with unstandardized coefisients (B) value of

1.592 which means that the fee has a positive effect

on audit quality. This shows that when the audit

quality has increased by a unit, the fee will also

increase by 1,592 units. X5 variable is

professionalism with unstandardized coefisients (B)

value of 0.934 which means that professionalism

does not have a positive effect on audit quality. X6

variable is audit experience with unstandardized

coefisients (B) value of 0.693 which means that the

audit experience has no positive effect on audit

quality.

4.8 Simultan Test (F)

More precisely, the Fcount value is compared with

Ftable where if Fcount > Ftable, the independent

variables simultaneously have a significant effect on

the dependent variable. At the level of α = 0.05 with

the numerator's freedom degree / df1 (k) = 6 (the

number of independent variables) and the

denominator's degree of freedom / df2 (n-k-1) = 32,

the Ftable value is 2.40. Thus, the value of Fcount

30.592 is greater than the value of Ftable 2.40.

Based on the results of these calculations can be

interpreted that the variables level education,

competence, motivation, fee, professionalism and

audit experience together influence variables audit

quality.

4.9 Partial Test (t)

Based on the table above, the results of the t test on

education level state that the level of education

Factors Affecting Audit Quality: Empirical Study on Public Accountants in Malang

affects audit quality. This shows a significant value

of education level of 0,000 which means smaller

than 0.05 so that hypothesis 1 is accepted. The

results of the t test on competence state that

competence affects audit quality. This shows a

significant value of competence of 0.010 which

means that it is smaller than 0.05 so hypothesis 2 is

accepted. The results of the t test on motivation state

that motivation does not affect audit quality. This

shows a significant value of motivation of 0.063

which means greater than 0.05 so that hypothesis 3

is rejected. The results of the t test in fee state that

the fee influences audit quality. This shows a

significant value of a fee of 0,000 which means

smaller than 0.05 so that hypothesis 4 is accepted.

The results of the t test in professionalism states that

professionalism does not affect audit quality. This

shows a significant value of professionalism of

0.054 which means greater than 0.05 so that

hypothesis 5 is rejected. The results of the t test on

audit experience state that the audit experience does

not affect audit quality. This shows the significant

value of audit experience of 0.091 which means that

it is greater than 0.05 so hypothesis 6 is rejected.

5 CONCLUSION

5.1 Effect of Level of Education on

Audit Quality

The first hypothesis states that the level of education

has a significant effect on audit quality. Statistical

test results show that the value of the variable

regression coefficient of education level is 1,906.

This value is significant at the 0.05 level with a p

value of 0,000. This result is supported by the results

of the calculation of t count 5.849 > t table 2.037.

This shows that the level of education has a

significant effect on audit quality, which means that

hypothesis 1.1 is accepted.

5.2 Effect of Competence on Audit

Quality

The second hypothesis states that competence has a

significant effect on audit quality. Statistical test

results show that the regression coefficient value of

the competency variable is 0.998. This value is

significant at the 0.05 significance level with p value

0.010. This result is supported by the results of

calculating the value of t count 2.730 > t table 2.037.

This shows that competency has a significant effect

on audit quality which means that hypothesis 1.2 is

accepted.

5.3 Effect of Motivation on Audit

Quality

The third hypothesis states that motivation has a

significant effect on audit quality. Statistical test

results show that the regression coefficient value of

the motivation variable is 0.638. This value is

significant at the 0.05 level with a p value of 0.063.

This result is supported by the calculation of the

calculated t value 1,928 < t table 2,037. This shows

that motivation does not significantly influence audit

quality, which means that hypothesis 1.3 is rejected.

5.4 Effect of Fee on Audit Quality

The fourth hypothesis states that fees have a

significant effect on audit quality. Statistical test

results show that the regression coefficient value of

the variable fee is 1.592. This value is significant at

the 0.05 level with a p value of 0,000. This result is

supported by the results of the calculation of the

value of t count 4.255 > t table 2.037. This shows

that the fee has a significant effect on audit quality,

which means that hypothesis 1.4 is accepted.

5.5 Effect of Professionalism on Audit

Quality

The fifth hypothesis states that professionalism has a

significant effect on audit quality. Statistical test

results show that the variable regression coefficient

of professionalism is 0.934. This value is significant

at the 0.05 significance level with p value 0.054.

This result is supported by the results of the

calculation of the value of t count 1.996 < t table

2.037. This shows that professionalism has no

significant effect on audit quality which means

hypothesis 1.5 is rejected.

IRCEB 2018 - 2nd INTERNATIONAL RESEARCH CONFERENCE ON ECONOMICS AND BUSINESS 2018

5.6 Effect of Audit Experience on

Audit Quality

The sixth hypothesis states that audit experience has

a significant effect on audit quality. Statistical test

results show that the value of the variable regression

coefficient audit experience is 0.693. This value is

significant at the 0.05 significance level with p value

0.091. This result is supported by the results of

calculating the t count value of 1,741 < t table 2,037.

This shows that the audit experience has no

significant effect on audit quality, which means that

hypothesis 1.6 is rejected.

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Factors Affecting Audit Quality: Empirical Study on Public Accountants in Malang