Risk Management Committee, Auditor Choice and Audit Fees

Abstract

We find that risk management committees and BIG4 audit firms contribute to audit fees. We use observations of 895 companies registered in Indonesia for 2014–2018, and to answer our hypothesis we used ordinary least squares analysis. The results show that BIG4 weakens the relationship between RMC and audit fees. Our study proves that higher demand for audit coverage will occur if there is a risk management committee within the company. As a result, audit fees increase. RMC may demand high-quality external guarantees, but the presence of BIG4 as a moderating variable reduces the relationship between the two variables. We assume that this can happen because auditors can work more efficiently if the company has an RMC, auditor(s) could indirectly reduce the risk because it is partially results from the performance of the RMC. In addition, we also use the robustness test to handle the endogeneity problem with consistent results as OLS. These findings provide evidence for policy makers about the relationship between audit fees and risk management committees.

Main Predictor(s) of Good Corporate Governance in National Government Departments: A Decision-tree Classification and Prediction Analyses

“…Regarding the link between audit fees and corporate governance, including the audit outcome, extensive research has been conducted in the private sector, such as the link between audit fees and audit committee effectiveness (Ali, Sing, and Al-Akram 2018), internal auditing (Alzeban and Sawan 2016), fraud (Lee and Ha 2021), risk management (Harymawan et al 2021), and even political connections (Ahmad, Bradbury, and Habib 2022). For the public sector, very few recent studies could be identified.…”

The School-ties Between Top Management Executive and Audit Partner: Exploring From Earnings Management in Indonesia

“…Several recent studies, including Lau et al (2016), Guan et al (2016), and Griffin et al (2021), have investigated the relationship between earnings management and the school ties of top management, including in Indonesia. For instance, Harymawan et al (2021) found that companies with top executives who have school ties with auditors tend to engage in earnings management practices to artificially inflate their reported earnings. Another study by Oswal et al (2020) examined the impact of school ties between top executives and politicians on earnings management in Indonesia and discovered a positive association between the two.…”

Penerapan Teknologi Informasi dan Profesionalisme dalam Meningkatkan Kinerja Auditor KAP Kota Semarang

“…Berbeda dengan auditor yang memiliki profesionalisme yang rendah, maka seorang auditor akan berpotensi untuk berperilaku disfungsional (mengutamakan kepentingan klien). Penelitian yang dilakukan oleh (Cahyani et al, 2015), (Nasir et al, 2014), (Putri & Suputra, 2013), (Handayani, 2013), serta (Harymawan et al, 2021) menyatakan bahwa profesionalisme berpengaruh positif pada kinerja auditor. Hal ini menunjukan bahwa seorang auditor memiliki profesionalisme tinggi maka semakin besar pula usaha mereka dalam memberikan jasa audit menyebabkan auditor tersebut akan dipercaya dan dapat diandalkan sehingga kinerja auditor akan meningkat.…”