The Effect of Audit Committee Effectiveness and Audit Firm Size on Key Audit Matters Disclosure: Evidence from Indonesian Manufacturing Companies
Keywords:
Audit Committee Effectiveness, Audit Firm Size, Key Audit Matters DisclosureAbstract
Abstract. The disclosure of Key Audit Matters (KAM) represents a significant innovation in audit reporting aimed at enhancing the transparency of audit information for financial statement users. This study examines the effect of audit committee effectiveness and audit firm size on KAM disclosure. The research objects include audit committee effectiveness proxied by audit committee meeting frequency, audit firm size, and KAM disclosure, with the subjects being manufacturing companies listed on the Indonesia Stock Exchange (IDX). This study employs a quantitative method with a verification approach, based on secondary data from 113 manufacturing companies during the 2022-2024 period, resulting in a total of 339 observational data. The sampling technique was conducted through purposive sampling, with panel data regression analysis using the Random Effect Model (REM) for hypothesis testing. The research findings indicate that audit committee effectiveness has a positive and significant effect on KAM disclosure, while audit firm size does not significantly influence KAM disclosure. The higher the frequency of audit committee meetings, the more KAM items are disclosed in the audit report. This study recommends adding variables such as company complexity, audit quality, or ownership structure for future research.
References
Abbott, L. J., Parker, S., & Peters, G. F. (2004). Audit Committee Characteristics and Restatements. In A JOURNAL OF PRACTICE & THEORY (Vol. 23, Number 1).
ACCA. (2018). Enhanced auditors’ report: A review of first-year implementation experience in Malaysia.
Al Lawati, H., & Hussainey, K. (2022). The Determinants and Impact of Key Audit Matters Disclosure in the Auditor’s Report. International Journal of Financial Studies, 10(4). https://doi.org/10.3390/ijfs10040107
Baatwah, S. R. (2023). Key audit matters and big4 auditors in Oman: a quantile approach analysis. Journal of Financial Reporting and Accounting, 21(5), 1124–1148. https://doi.org/10.1108/JFRA-09-2021-0289
Batara, G., Jalaluddin, J., & Yahya, M. R. (2024). Analysis of Key Audit Matters Disclosures in Financial Reporting: The First Evidence from Indonesia. Journal of Accounting Auditing and Business, 7(2), 52–63. https://doi.org/10.24198/jaab.v7i2.56263
Boonlert-U-Thai, K., & Suttipun, M. (2023). Influence of external and internal auditors on key audit matters (KAMs) reporting in Thailand. Cogent Business and Management, 10(3). https://doi.org/10.1080/23311975.2023.2256084
Dzikron, M. D., & Purnamasari, P. (2021). Pengaruh E-Audit dan Kompetensi Auditor terhadap Kualitas Audit. Jurnal Riset Akuntansi, 1(1), 47–51. https://doi.org/10.29313/jra.v1i1.189
Hamidah Dewi Anggraini, Pupung Purnamasari, & Nopi Hermawati. (2023). Pengaruh Audit Investigatif dan Pengalaman Auditor terhadap Pendeteksian Kecurangan. Jurnal Riset Akuntansi, 123–128. https://doi.org/10.29313/jra.v3i2.2812
IAASB. (2015). International Standard on Auditing 701: Communicating key audit matters in the independent auditor’s report.
IAPI. (2021). Standar Audit 701: Pengomunikasian hal audit utama dalam laporan auditor independen.
Jensen, M. C., & Meckling, W. H. (1976). THEORY OF THE FIRM: MANAGERIAL BEHAVIOR, AGENCY COSTS AND OWNERSHIP STRUCTURE. In Journal of Financial Economics (Vol. 3). Q North-Holland Publishing Company.
Komite Profesi Akuntan Publik. (2024, September 12). PPPK, KPAP, IAPI, dan OJK bicara implementasi key audit matters di Indonesia.
Penerapan Tahun Pertama SA 701 Tentang Pengomunikasian Hal Audit Utama (HAU) di Indonesia. (n.d.). Retrieved www.iapi.or.id
Peraturan Otoritas Jasa Keuangan Nomor 55/POJK.04/2015 Tentang Pembentukan Dan Pedoman Pelaksanaan Kerja Komite Audit (2015).
Pinto, I., & Morais, A. I. (2019). What matters in disclosures of key audit matters: Evidence from Europe. Journal of International Financial Management and Accounting, 30(2), 145–162. https://doi.org/10.1111/jifm.12095
Qadrina, M. F., & Raharja, S. (2024). Analisis Faktor-Faktor yang Memengaruhi Pengungkapan Key Audit Matters di Indonesia. Jurnal Wahana Akuntansi, 19(1), 67–83. https://doi.org/10.21009/wahana.19.015
Rahaman, M. M., Hossain, M. M., & Bhuiyan, Md. B. U. (2023). Disclosure of key audit matters (KAMs) in financial reporting: evidence from an emerging economy. Journal of Accounting in Emerging Economies, 13(3), 666–702. https://doi.org/10.1108/JAEE-11-2021-0355
Shao, X. (2020). Research on Disclosure Status and Influencing Factors of Key Audit Matters. Modern Economy, 11(03), 701–725. https://doi.org/10.4236/me.2020.113052
Utomo, S. T., & Mawardi, W. (2024). OPTIMIZATION OF BUSINESS STRATEGY IN IMPROVING THE EFFICIENCY OF BUSINESS CAPITAL USE. Corporate and Business Strategy Review, 5(4), 76–89. https://doi.org/10.22495/cbsrv5i4art7
Velte, P. (2018). Does gender diversity in the audit committee influence key audit matters’ readability in the audit report? UK evidence. Corporate Social Responsibility and Environmental Management, 25(5), 748–755. https://doi.org/10.1002/csr.1491
