The effect of audit cost, information technology, and auditor's competence on audit quality during the COVID-19 Pandemic

Abstract

The Corona Virus Disease (COVID-19) is endemic in Indonesia and affects many sectors, including the economic and government sectors. During the COVID-19 pandemic, BPK, as the government’s external auditors, continued to carry out the audit to maintain accountability for state finances despite budget refocusing and large-scale social restrictions (Pembatasan Sosial Berskala Besar, PSBB). This study aims to determine the significance of audit costs due to budget refocusing, IT utilization, and auditor competence on audit quality during the work from home (WFH) policy. This study processed questionnaire data from 70 auditors from three representative offices of BPK in provinces under three different categories, namely A, B, and C. The research data was processed using SmartPLS software to analyze data with measurement models and structural models with a 90 percent confidence level. Data processing shows that the effect of audit costs and the use of information technology on audit quality during the COVID-19 pandemic has a feeble and insignificant effect; thus, the hypothesis is not supported. Meanwhile, the competence of auditors has a significant effect on the quality of audit results; ergo, the hypothesis is supported.

The Role of Information Technology as Mediating Variable of Professionalism and Competence in Auditor Performance

“…The better the competence of an auditor, the better the auditor's performance. The research of Indra et al, (2021); Priogandi et al,(2021) and Kurniawan et al (2020) show that competence has a significant effect on auditor performance.…”

“…Auditors tend to rely on explanations from clients rather than finding their own regarding audit findings. Professionalism and competence are two critical factors for auditors in maintaining audit quality (Saputro & Mappanyukki, 2022;Indra et al, 2021;Simanjuntak et al, 2015) Arens & Loebbecke (2011) stated that professional auditors carry out audits carefully and thoroughly. Professionalism is a description of the performance of an auditor.…”

“…Research results by Wulandari & Prasetya, 2020;Prabayanthi & Widhiyani, 2018 show that professionalism improves auditor performance.Competence in auditing refers to the ability, expertise, and experience to understand the criteria and determine the evidence needed to support the conclusions (Rahayu & Suhayati, 2013). Research results from Indra et al (2021); Simanjuntak et al, (2015) demonstrate that competence can improve the performance of auditors.…”

Enhancing the Role of the Audit Board of the Republic of Indonesia in Fraud Detection

“…The government's external auditor acts as a third party in agency theory, capable of bridging the differences between agents and principals regarding the management and accountability of state/regional finances. According to Indra, Gamayuni, and Syaipudin (2021), to minimize the risk of fraud and conflict in the agency concept, the principal must be assisted by a third party and allocate funding or budget funds for supervisory activities as it is impossible to have it performed unassisted. The government's external auditor in Indonesia is entrusted to the Audit Board of Indonesia (Badan Pemeriksa Keuangan, BPK), the only institution with a role in financial audit activities that assists the House of Representatives (Dewan Perwakilan Rakyat, DPR) in supervising government executive institutions.…”