Determinants of Audit Quality: The Role of Auditor Independence, Competence, and Professional Ethics in Public Accounting Firms in Indonesia
DOI:
https://doi.org/10.56127/ijml.v5i2.2974Keywords:
audit quality; auditor independence; auditor competence; professional ethicsAbstract
Audit quality has become an increasingly critical issue in maintaining public trust in financial reporting, especially in Public Accounting Firms in Indonesia. Several audit failure cases in corporate financial statements indicate that auditors do not always succeed in detecting material misstatements effectively. This condition raises concerns regarding the role of auditor independence, competence, and professional ethics in ensuring reliable audit outcomes. Therefore, this study aims to analyze the effect of auditor independence, competence, and professional ethics on audit quality in Public Accounting Firms in Indonesia. This study employs a quantitative research approach using a survey method. Primary data were collected through questionnaires distributed to auditors working in Public Accounting Firms. The data were analyzed using multiple linear regression analysis to examine the relationship between independent variables and audit quality. The results show that auditor independence, competence, and professional ethics have a positive and significant effect on audit quality. Among these variables, professional ethics is found to be the most dominant factor influencing audit quality. This indicates that ethical behavior plays a crucial role in ensuring audit integrity and reliability, beyond technical competence and independence. The implications of this study suggest that Public Accounting Firms should strengthen ethical standards, improve auditor competence through continuous professional training, and maintain auditor independence to enhance audit quality. These efforts are essential to improve public trust in audited financial statements and strengthen the credibility of the auditing profession. The originality of this study lies in the integrated analysis of auditor independence, competence, and professional ethics within a single empirical model in the context of Public Accounting Firms in Indonesia. This study contributes to auditing literature by providing comprehensive evidence that audit quality is shaped not only by technical factors but also by ethical and behavioral dimensions of auditors.
References
Beattie, V., Fearnley, S., & Hines, T. (2013). Auditor independence: UK evidence. Accounting and Business Research, 43(1), 1–25. https://doi.org/10.1080/00014788.2012.693056
Bonner, S. E., & Lewis, B. L. (1990). Determinants of auditor expertise. Journal of Accounting Research, 28(Supplement), 1–20. https://doi.org/10.2307/2491243
Carcello, J. V., Hermanson, D. R., & McGrath, N. T. (1992). Audit quality attributes: The perceptions of audit partners, preparers, and financial statement users. Auditing: A Journal of Practice & Theory, 11(1), 1–15.
DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3(3), 183–199. https://doi.org/10.1016/0165-4101(81)90002-1
Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125–152. https://doi.org/10.2308/ajpt-50006
Knechel, W. R., Krishnan, G. V., Pevzner, M., Shefchik, L. B., & Velury, U. (2013). Audit quality: Insights from the academic literature. Auditing: A Journal of Practice & Theory, 32(Supplement 1), 385–421. https://doi.org/10.2308/ajpt-50350
Sweeney, B., & Pierce, B. (2004). Ethics and audit quality. European Accounting Review, 13(3), 587–608. https://doi.org/10.1080/0963818042000216833
International Federation of Accountants (IFAC). (2018). Handbook of the Code of Ethics for Professional Accountants. IFAC. https://www.ifac.org
Hay, D., Knechel, W. R., & Wong, N. (2006). Audit fees: A meta-analysis. The Accounting Review, 81(4), 839–870. https://doi.org/10.2308/accr.2006.81.4.839
DeFond, M., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2–3), 275–326. https://doi.org/10.1016/j.jacceco.2014.09.002
Simunic, D. A. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting Research, 18(1), 161–190. https://doi.org/10.2307/2490397
Palmrose, Z. V. (1988). An analysis of auditor litigation and audit service quality. The Accounting Review, 63(1), 55–73.
Lennox, C. (1999). Audit quality and auditor size. Journal of Accounting and Economics, 27(1), 71–97. https://doi.org/10.1016/S0165-4101(99)00003-9
Deis, D. R., & Giroux, G. A. (1992). Determinants of audit quality in the public sector. The Accounting Review, 67(3), 462–479.
Watkins, A. L., Hillison, W., & Morecroft, S. E. (2004). Audit quality: A synthesis of theory and empirical evidence. Journal of Accounting Literature, 23, 153–193.
Francis, J. R., & Yu, M. D. (2009). Big 4 office size and audit quality. The Accounting Review, 84(5), 1521–1552. https://doi.org/10.2308/accr.2009.84.5.1521
Downloads
Published
Issue
Section
Citation Check
License
Copyright (c) 2026 Tommy Kuncara, Poso Nugroho, Fera Riske Anggita
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
