Academic journal article European Research Studies

Analysis of Auditor Performance by Using Covariance Based Structural Equation Modeling: A Study of Public Accounting

Academic journal article European Research Studies

Analysis of Auditor Performance by Using Covariance Based Structural Equation Modeling: A Study of Public Accounting

Article excerpt


Public accountants are individuals who work in the field of service, in the form of both attestation and non attestation services. Attestation services in the form of operational, compliance, and financial audits are the most common services (Arens, 2013). In Indonesia, public accountants are commonly called auditors. The auditor may work at the public accounting firms. The Resource Based View (RBV) theory states that in order to gain competitive advantage and be trusted by clients, accounting firms must perform resource analysis. The first resource in question is the auditor. The auditor in performing its role is guided by the Auditing Standards stipulated by the Indonesian Institute of Certified Public Accountants and the code of ethics of the accounting profession that in Indonesia is known as the Code of Ethics of Indonesian Accountants. In SA 200 paragraph 3 (IAPI, 2013) states that the purpose of the audit is to increase the user's confidence in the financial statements by issuing an opinion on the presentation of the financial statements. As a professional, the auditor should avoid omissions, dishonesty, and should be independent.

Auditors are required to perform well. Performance is the result of an evaluation of the work performed compared to the predefined criteria (Robbins, 2015). Good performance for auditors is determined based on three aspects that are audit quality, audit quantity, and timeliness in completing the audit. Good performance can result in rewards (Porter, 1994). This causes the auditors to try to show his their performance in doing his job.

Auditor performance evaluation will measure the success of auditors in conducting audits based on established procedures. In fact, not all auditors perform their duties in accordance with auditing standards. In America, the case of irregularities by very eputable auditors takes place in the Enron corporation involving accounting firm of Arthur Andersen, through fraudulent financial condition that is planned creatively (Semendawai et al., 2011). In Canada, cases of irregularities occur in Nortel companies involving Deloitte and Touche. The distorted practice that occurred was the improper suggestion of distributing corporate bonuses to 43 top managers. In Indonesia, the case that happened was profit manipulation in PT Kereta Api Indonesia. The manipulation is done by stating that the company experienced a profit of IDR 9.9 billion (742,500 USD)while the fact is a loss of IDR63 billion (4,72,500 USD). This case involves accounting firm of S. Manan. There are still many cases that occur both in Indonesia and other countries. This problem is the basis for many researchers to test on factors that cause auditors to perform deviantacts.

There are several factors that affect the auditor's performance. These factors include the ability, knowledge, motivation, and experience (Ashton and Robbert, 2011; Ferris, 1977; Owhoso and Weickgenannnt, 2009), professional commitment (Siders 2001; Ketchand and Strawser, 1998; Ferrish, 1981; Andrea, 2007), affilation, power, and achivement needs (Adrian, 1986). However, the results of research using the above variables are still not consistent. Therefore, this study attempt to re- examine the variables that affect the auditor's performance of motivation, experience, commitment, and understanding on the regulation of the Public Accountant Act (Undang-Undang Akuntansi Publik).

Motivation is the incentive of individuals to act in a certain way to achieve goals (Douglas, 1960). Auditors have motivation in performing their role. Armstrong (2003) mentions that motivational strategies are needed to increase effective contribution in achieving goals. Therefore, it is important to understand the motivation in determining auditor behavior. In addition to motivation, experience is one of the factors that determines auditor behavior. Experiences can be formed from educational background and working hours (Kvalsaughen, 2009). …

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