International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (1309-1317), Month: October 2019 - March 2020, Available at: www.researchpublish.com
Analysis of Influencing Factors Auditor Switching Nadya Sintiadewi1, I Nyoman Wijana Asmara Putra2 1,2
Udayana University
1,2
Faculty of Economic and Business, Bali, Indonesia
Abstract: Auditor independence is the main key of the auditor profession, including to assess the reasonableness of financial statements. To maintain auditor independence, the government issues rules governing auditor rotation. However, there are various factors that can influence the practice of voluntaru auditor turnover, including: public accountant firms size, company growth rate, financial distress, audit tenure, and change of board of commissioners. This study aims to empirically prove the affects of Public Accountant Firm size, company growth rate, financial distress, audit tenure, and change of board of commissioners. The project of this research is companies in property and real estate sector listed on the BEI period of 2016-2018. The number of sampels obtained was 46 companies, with the sampling technique used was purposive sampling. The analysis technique used is logistic regression analysis. The result showed that audit tenure had a positive effect on auditor switching, while other factors namely public accountant firm size, company growth rate, financial distress, audit tenure, and change of board of commissioners did not have a positive effect on auditor switching. Keywords: Public Accountant Firm size, Company Growth Rate, Financial Distress, Audit Tenure, and Change of Board of Commissioners, Auditor Switching.
I. INTRODUCTION Companies must continue to optimize their quality by maintaining and increasing public confidence so that companies can continue to compete with each other. Financial statements are important instruments because they provide information about the financial position, company performance, and resources owned by the company in certain periods as a means of decision making for users of financial statement information such as; managers, investors, creditors, suppliers and the public. The auditor's opinion is needed in order to find out whether a company's financial statements have been fairly presented in accordance with Financial Accounting Standards (SAK) in force in Indonesia and can be trusted by the public and assess the company's business continuity through Public Accounting Firms (Setiadamayanthi & Wirakusuma, 2017 ). Auditor independence is the main key of the audit profession, including to assess the reasonableness of financial statements (Abdul Nasser, Abdul Wahid, Mustapha Nazri, & Hudaib, 2006). Absolute independence must exist in the auditor when he is carrying out auditing duties which require him to attest to the fairness of his client's financial statements (Mulyadi, 2011: 74). It is natural for users of financial statements, regulators, and other parties to always question whether auditors can be independent in carrying out their duties. Doubts about independence are heightened because public accounting firms have been given the freedom to provide non-audit services to clients they audit. Damayanti & Sudarma (2007) argues that an auditor's independence will be lost if he has a personal relationship that is too long with the client, because this can affect the mental attitude and audit opinion that will be given. In an effort to maintain public trust in the audit function and to protect the objectivity of auditors through a series of provisions, the auditor profession is prohibited from having personal relationships with their clients that could lead to potential conflicts of interest (Saud, 2017). One suggestion is to have a mandatory rotation because it can increase the ability of auditors to protect the public through increasing vigilance for any possible improperness, improving the quality of service and preventing closer relations with clients (Abdul Nasser et al., 2006). Auditor Switching is a change of auditor and Public
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