The Effect of Auditor Experience and Professional Judgment Towards Quality of Audit Evidence Collected(Study about CPA Firm in South Jakarta)

THE EFFECT OF AUDITOR EXPERIENCE AND

PROFESSIONAL JUDGMENT TOWARDS QUALITY OF

AUDIT EVIDENCE COLLECTED

(Study about CPA Firm in South Jakarta)

Written by:

Dea Makmur Hadinugraha 109082100013

ACCOUNTING MAJOR

INTERNATIONAL CLASS PROGRAM FACULTY OF ECONOMICS AND BUSINESS

SYARIF HIDAYATULLAH STATE ISLAMIC UNIVERSITY JAKARTA 2013

vi

. PERSONNAL IDENTITY

Name : Dea Makmur Hadinugraha

Place and Date of birth : Serang, 3 March 1991

Occupation : Colledge

Religion : Islam

Gender : Male

S t a t u s : Single

Address : Kompleks Perikanan Ciceri No. 280

RT 02/RW 16 Kelurahan Sumur

Pecung Serang 42118. Telp. (0254) 200065 HP. 087884520171

Rent a house : gg. Masjid Arriyad cipayung. Ciputat Tangerang Selatan - Banten

Email :sapiladahitam03@gmail.com

2. EDUCATION

 Elementary School Negeri Serang 03 (1997 2003)  Junior High School 01 Serang (2003 2006)

 Senior High School Negeri 01 Serang (2006 2009)  University of Syarif Hidayatullah Jakarta (2009 Now)

3. ORGANIZATIONAL EXPERIENCE

 Coordinator of collecting funds in IKATAN ALUMNI SMANSA SERANG 2009 .

 IT development in International Program in UIN Syarif Hidayatullah Jakarta.

4. SEMINAR AND TRAINING EXPERIENCE

 Seminar Avoid and the Way to Corrupt held by UIN Syarif Hidayatullah Jakarta 16th October 2011

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THE EFFECT OF AUDITOR EXPERIENCE AND PROFESSIONAL JUDGMENT TOWARDS QUALITY OF AUDIT EVIDENCE COLLECTED

ABSTRACT

The purpose of this research is to observe the effect of auditor experience and professional judgment as independent variable, towards quality of audit evidence collected as dependent variable. This research used primary data which is collected by distributing the questioner and selected by using purposive sampling method. The samples consist of CPA firm in South Jakarta. There 5 CPA firm taken as a sample. The data is tested using multiple linier regression analysis with significant level 0.05. The significance level of t-test in this research is 0.000 for auditor experience and 0.023 for professional judgment and the significant level of f-test is 0.000. It indicates that the auditor experience and professional judgment significant positive effect towards quality of audit evidence collected.

viii

PENGARUH PENGALAMAN DAN PERTIMBANGAN PROFESIONAL AUDITOR TERHADAP KUALITAS BUKTI AUDIT YANG DIKUMPULKAN

ABSTRAK

Tujuan dari penelitian ini adalah untuk mengetahui pengaruh pengalaman auditor dan pertimbangan auditor, sebagai variabel bebas terhadap kualitas bukti audit, sebagai variabel terikat. Data yang digunakan pada penelitian ini adalah data primer dengan cara menyebarkan questioner yang dipilih menggunakan metode purposive sampling. Sampel terdiri dari KAP yang berada di wilayah Jakarta Selatan. Ada 5 KAP yang menjadi sampel dari penelitian ini. Data diuji dengan analisa regresi linear berganda. Level signifikansi untuk t-test dari penelitian ini adalah 0.000 untuk pengalaman auditor dan 0.023 untuk pertimbangan profesional dan level signifikansi untuk f-test adalah 0.000. Ini menunjukkan bahwa pengalaman auditor dan pertimbangan profesional memiliki pengaruh signifikan positif terhadap kualitas bahan bukti audit.

ix

F

!"# ! $% ! " &' ( & &'& ) *

+ ), #*q, as well as his guidance. So, because Allah SWT I can finish this research

on time.

Shalawat always gives to the Prophet of Muhammad SAW and all his family and friends who always helped him in establishing Dinullah in this earth.

With the strength, intelligence, patience, and strong desire from Allah SWT, I am able to finish this mini thesis as graduation pre requirement for bachelor degree. I believe there is an invisible hand which has helped me going through this process.

My special thank for my mom who had supported me with your best way and never gave up educating me to be a good son. No matter how bad I was, you always be by my side and always behaved me so well. I promised to make you happy and proud of me by being a son that you want. Thank you so much for already being the best mom ever for me, my pray are always for you.

I also would like to extend my gratitude to my father, Muchari M.Sc, who always support my studying and teach me your best experience. You already be my inspiration and my teacher who teach me how to life in this world. Making you proud of me is always becoming my priority. Thanks for the hard work that had you done for the family. Thanks a lot for being great father ever for me.

x

Special thank to my beloved uncle who had supported me in moral and financial side. Thank for all for everything who already done for me. Your advice, time, and spirit help me to finish the bachelor degree. I believe, I can make you proud. I promise! My sister, Ajeng Larasati who has always helped and supported me for my best, whatever I do and whenever it is.

I believe I am nothing without each one of you who has helped me in finishing this mini thesis. Thus, in this very special moment, let me say many thanks to all of them who have been helping me the process of this thesis, including:

1. Muchari, M.Sc and Sri Maryani A.Md as my parents who give me spirit for completing this mini thesis.

2. Prof. Dr. Abdul Hamid, MS as Dean of the Faculty of Economics and Business who helped me in completing this mini thesis and received Bachelor Degree. 3. Ahmad Dumyathi Bashori, MA as Head of International Program.

4. Dr. Amilin, SE, Ak, M.Si as my thesis supervisor I. You are my mentor who has provided direction and guided me, shared your knowledge to me, and thank you for your time that you gave .So, I able to finish this mini thesis.

5. Yulianti, SE, M.Si as my thesis supervisor II who has provided direction, guidance, and thank you for your time and your patience that you gave to me, so I can finish this mini thesis. So sorry for my bad attitude during the consultation. 6. All lecturers who have taught me patiently, may they have given are recorded

xi

7. Sugih Waluyo as the staff in International office. Thank you for always helping me in doing administrative things in UIN. You also taught me a lot in doing my thesis.

8. My girl, Ressa andresta. The strongest and the most diligent girl that I ever had. Thanks for your time, because you always beside me.

9. All my friends in accounting international 2009, angga, arin, aul, bimo, cici, usman, adnan, diah, evi, gamal, kokoh, nanda, nenek, opi, pipit, putri, saepan, septian, iyus, tami. Thanks for the remarkable moments that we had been through together and special thanks for some of you that already shared and taught me your valuable experiences, especially in doing thesis. Thanks also for my friends in management international 2009.

10. Thanks for all seniors and juniors that had helped me during my study, thanks a lot guys!

I realize this mini thesis is still far from perfection, thus suggestions and constructive criticism from all parties are welcome, in order to improve my thesis. Finally, only Allah SWT will return all and I hope this thesis will be useful to all parties, especially for writers and readers in general, may Allah bless us and recorded as the worship of Allah s hand. Amin.

Wassalammualaikum Wr.Wb

Tangerang, September 2013

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Certification from Supervisor... ii

Certification of Comprehensive Exam Sheet... iii

Certification of Thesis Exam Sheet ... iv

Authenticity Statement Sheet Scientific Work... v

Curriculum Vitae ... vi

Abstract... ix

Abstract... x

Foreword... xi

Table of Content... xiv

List of Table... xviii

List of Figure ... xix

List of Appendixes... xx

CHAPTER I INTRODUCTION G. H IJ KLMNO PQ... 1

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®. »©­ ³¼ ¸©Â¨°¨©¶ ³¸ÂD©³©¯ ½¨¶® ³¨¸¶Ã¬ ²) . 41 b. Individual Parameter or Partial Significance Test. (t-Test) .. 42

c. Simultaneous Significance Testing (f-Test) . 42 d. Multiple Linear Regression Analysis .. 43

E. Operational Research Variable ... 43

1. Auditor experience as variable X1 ... 44

2. Auditor s Professional Judgment as a variable X 2 ... 44

3. The Quality of Audit Evidence Collected as a Variable Y ... 45

Ä ÅÆÇÈ É ÊË Ì ÆÍ ÆÎ ÏÐ Ë ÐÆÍÑÑË Ð Ä ÒÐ Ð Ë Ó Í A. General Description of Research Object ... 48

B. Descriptive Data ... 49

C. Analysis and Discussion ... 52

1. Validity Test ... 52

2. Reliability Test ... 56

3. Classic Assumption Test ... 57

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Þ ßàáâ ã äå Þ æçÞ è é ê ë æçàçìäãÞ æííã çì àâ ë æç î. Conclusion ... 71

B. Recommendation ... 72

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2.1 ÿ ... 29

3.1 Variable ... 46

4.1 Questioners Distribution ... 49

4.2 Distributed Questioners in each CPA firm ... 51

4.3 Description of Respondents ... 52

4.4 Result of Validity Test with Reliability Analysis for Audit Experience 53 4.5 Result of Validity Test with Reliability Analysis for Professional Judgment of Auditor ... 54

4.6 Result of Validity Test with Reliability Analysis for Quality of Audit Evidence Collected ... 55

4.7 Reliability Test for Auditor experience ... 56

4.8 Reliability Test for Professional Judgment of Auditor ... 56

4.9 Reliability Test for Quality of Audit Evidence Collected ... 57

4.10 Kolmogorov-Smirnov Test ... 59

4.11 Multicollinearity Test ... 60

4.12 Model Summary ... 62

4.13 Simultaneous Significant Test (F-Test) ... 63

4.14 Significant Partial Test (T-Test) ... 64

vii

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Appendix 2 Raw Data ... 84

Appendix 3 Output SPSS ... 85

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PT Kimia Farma is one of the drug manufacture owned by government in Indonesia. In the audit dated December 31, 2001, management of Kimia Farma reported a net profit at Rp 132 billion, and the report has been audited by Hans Tuanakotta & Mustafa (HTM). However, the Ministry of SOEs and the BAPEPAM considers that net income is too large and contains elements of fraud. After doing the re-audit, on October 3, 2002 Kimia Farma financial statements re-stated and the results have been found fairly fundamental error. In the recent of financial report, the net profit has been presented only Rp 99.56 billion, Rp 32.6 billion lower, or 24.7% lower from profit has been reported earlier. Errors that occur in the Raw department was overstated sales of Rp 2.7 billion, in the Central Logistics unit was overstated inventory of Rp 23.9 billion, in the unit of Pharmaceutical Wholesaler unit was overstated inventory of Rp 8.1 billion and overstated sales of Rp 10.7 billion.

The Effort to mark-up the money taken by the directors of Kimia Farma is exactly to attract the investors to invest their money in PT. Kimia Farma. The errors associated with presenting inventories are arises because the values listed in the stock price was inflated. PT Kimia Farma, through the director of the

2 production, published two lists of stock prices on the 1st and 3rd February, 2002. The list price per 3th February value has been mark-up and used as the basis of assessment of inventory at the distribution unit in Kimia Farma per December 31, 2001. Whereas presenting the errors related with the sale are using double counting on the sale. Double counting is done on units that are not sampled by auditors, so it can t be detect.

Bapepam s investigation group noted that the audited financial statements KAP PT Kimia Farma has followed applicable audit standards, but failed to detect the fraud. In addition, the CPA firm has also not been shown to help the management to commit the fraud. The result of this case, the PT Kimia Farma is subject to a fine of Rp 500 million, the old directors of the PT Kimia Farma to a fine of Rp 1 billion, the audit partner HTM which audit Kimia Farma fined of 100 million dollars. Mistakes made by the partner HTM is that he did not managed to overcome the risk of audit in detecting the profit mark by PT Kimia Farma, even though he had run an audit in accordance SPAP. (Bapepam, PT Kimia Farma Tbk case, Bapepam Press Release, December 27, 2002).

Another case is the case that struck a public accountant who indicated Sidhartha Justinus Aditya made a mistake in auditing the financial statements. Great River International, Tbk. The case appear after the findings of the BAPEPAM auditor's investigation found the inflating indication in sales account, receivables and assets up to hundred billion dollars in financial statements Great

3 River which eventually resulted in the company's cash flow difficulties and failed to pay the debt. So, based on these investigations BAPEPAM states that public accountants examine financial statements Great River join a suspect. Therefore the Minister of Finance as of November 28, 2006 has frozen public accountant license Justinus Aditya Sidhartha for two years for committing violations of the Public Accountants Professional Standards (SPAP) Audit report relating to the Consolidated Financial Statements of PT. Great River in 2003. (Bapepam, PT Great River International Tbk case, Bapepam Press Release, November 23, 2005)

The last shocking case is the manipulation of Satyam Computer Services Ltd financial reporting. The innovative company run in information technology is the largest in India and has received the most prestigious award of Entrepreneur of the Year Ernst & Young in 2007. Actually, the Ernst & young itself can t detect the fraud. The Modus is to start with a small thing is to cover the difference between the actual earnings are recorded in the books are getting more and more swollen. The fake company's profit margin is 24% (U.S. $ 133 million) of total revenue. Different from the actual profit is only 3% (U.S. 12.5 million) of total revenue U.S. $ 434 million, - There is also a difference of U.S. $ 100 million long-term debt of actual (actual long-term debt) with recorded in the books. The company's U.S. $ 1.2 billion (53.61 billion rupees) which was recorded in the 2008 third quarter financial statements, cash Satyam fictitious or

4 94%. (Journal of Economics, Business and entrepreneurship Vol. 1, Number 2, 2010)

All skill checks essentially directed to present the audit evidence that are relevant and valid in order to describe audit findings. With the development of the type and form of evidence is certainly needed those skilled auditor to gather the quality of evidence. Auditors are required to have qualifications to understand the criteria used and should be competent to determine the type and amount of evidence to be collected in order to reach conclusions right after the examination. (Arens et al, 2011:5).

Sampling for gathering audit evidence and doing audit procedure are part of auditor decision. In doing sampling audit procedure, the auditor should have skills for finding good quality evidence. The quality of audit evidence is important because of the evidence used to corroborate or deny the assertions of management. The evidence gathered from the audit procedures used to determine (Siti and Ely, 2010:117).

Audit evidence is all the media information that is used by auditors to support the argument, opinions or conclusions and recommendations in convincing level of concordance between the conditions of the criteria. Before familiar with computerized systems, the entire audit evidence in the form of notes on paper, or what is often referred to as paper based. At that time, audit evidence in the form of financial statements and transaction documents. However, it has

5 been abandoned because it was considered less efficient and effective, and cost large in data storage and maintenance of data. In the recording system manual, there are several shortcomings that it needs more time a lot to keep track of and search for information, documents missing vulnerable, need space and absorb the cost of labor (Agoes Sukrisno, 2008:35).

The main decisions who has faced by auditors is sufficient amount of evidence that must be collected to ensure that the financial statements have been presented reasonable. It needs to be considered to remember of enormous costs incurred for doing detailed audit for the financial statements that the auditor is expected to be fully convinced that the opinion given is correct. By combining all of the evidence overall, the auditor may decide to issue an audit report if there is no more doubt on his audit. Decision of the auditor in the audit evidence collection can be divided into four sub-decisions, namely: audit procedures to be used, the sample size will be chosen for a particular procedure, the item will be selected from the population and when the procedure will be performed (Arens, 2011:228).

Here is the one example of fraud did by management and also measures for the removal of evidence of fraud, which indicated that fraud carried out by the management of Bank Indonesia (BI):

Although the Commission recognizes to gain resistance from BI in the investigation of BI funds flow case and happen some effort the documents being transferred after the commission search in BI on January 30, 2008, Bibit said the KPK was not worry about missing

6 evidence when three suspected cases of financial flows BI was not immediately arrested. The day after the search is done KPK investigators in some space in Building BI, including the Governor BI, the Commission found the removal efforts and removal of documents allegedly committed by the secretary of the Governor of the central bank. (Antara News, 2008)

Before the information electronic transaction (ITE) law was passed, a form of evidence in litigation is evidence set forth in Law No. 8 1981 on the Law of Criminal Procedure Article 184 (bhpn.go.id). After the legalization of information electronic transaction Law, the internal auditor should be more cautious to evaluate company, because all forms of common practice helped by electronic media and can be used as audit evidence to be evaluated. Because today, for supporting evidence, must supported by at least 2 of 3 categories in information electronic transaction law (ITE) No.11 of 2008 (physical evidence, data, testimony) to reinforce his opinion.

However, in practice auditor can be make inferences bias (audit bias), so giving rise the resistance or friction which not necessary by the auditee. (Valery G. recurrent, 2011:87). Here is several factors contributing to bias the audit include:

1. Examination time is not comparable Time checks are not comparable to the extent of the field areas were examined.

7 3. Just rely in one category and the auditor directly makes the conclusion which set forth into a confirmation memo or directly posted to audit report.

There are significant differences between experienced and inexperienced auditors with respect to knowledge, problem solving skills, searching and evaluating evidence, and decision quality (Ali et al., 2010 in Zakari and Karim, 2012).

Through education, training and experience, auditors become an expert in auditing and accounting, as well as have the ability to assess objectively and impartially exercise judgment against the information recorded in the books of the company or any other information disclosed by the audit successfully. In performing the audit task, an auditor is required to have the ability to carry out the duties of the audit. The evidence collected should be sufficient to convince the auditor to give his opinion. In addition, he also had to consider the suitability of such evidence, determine the criteria in accordance with generally accepted standards (Seruni and Wardoyo, 2011).

Based the understanding above, experience and professional judgment become the indicator to gathering quality of audit evidence. Auditor who have much experience can do audit task better than auditor who have less experience. So when the auditor wants to be public accountant, experience is one of important

8 requirement. Professional judgment of auditor is also important for gathering quality of audit evidence because auditor has limited time and money, it impossible to audit whole financial statement on that company. The auditor must use professional judgment to select the quality of audit evidence and used it to state their opinion for that company. The collection evidence that audit quality can only be done by a competent auditor to have adequate knowledge, experience and skills to auditor's professional judgment in determining the evidence collected along with supporting evidence from other categories. Based on the description above, I am interested in doing research entitled ` a b c d d bef gd h i j k fglmn c opblkbqeb rq j s lg d bnn kg q rt ui j vwbq f fgxrljn Qi rtk fy g d h ijkf c zk j bq eb

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This research has done by Faridah (2010) with title : The influence of auditor experience and task difficulty to quality of audit evidence , Seruni and Trimanto (2011) with title : The influence of auditor experience and professional judgment of auditor to quality of audit evidence collected and Devani (2012) with title : The influence of competency and professional judgment to quality of audit evidence , with the difference as follow :

1. Faridah (2010)

a. Variable : the previous research used audit experience and task difficulty as independent variable.

9 b. Region : Bandung

c. Analysis method : The previous research used path analysis d. Year of research : 2010

2. Seruni and Trimanto (2011)

a. Analysis Method : The previous research used path analysis b. Region : CPA firm in Bandung

c. Year of research : 2011

3. Devani (2012)

a. Variable : The previous research used competency and professional judgment as independent variable

b. Region : Nation Owned Enterprise in Bandung

c. Analysis method : The previous research used multiple regression model

10

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Various problems underlying the establishment of research and writing are as follows:

1. Are the experience and professional judgment auditor partially and simultaneously significant effect with the quality of audit evidence collected?

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The study has several objectives as follows:

1. Analyzing the effect of auditor experience and professional judgment to audit the quality of the evidence collected.

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1. give contribution to the development of the theory, especially related to the auditor and the balance of professional experience to the quality of audit evidence collected

2. For Auditors expected can give contribution in order to carry out his professional duties, especially when the client gather audit evidence by relying on experience and professional judgment

3. For the Indonesian Institute of Accountants expected can give contribution to decision-making when creating rules or policies that will be used by its members.

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¼ ½¾ncy theory is a theory that explains the relationship between

agents as those who manage the company and the principal as the owner of both which are bound in a contract¿ ÀÁ¾ owner or principal is a party to

evaluate the information and agents are running as part of management activities and decision making ÂÃensen and ÄecklingÅÆÇÈÉÊ¿

Ãensen and Äeckling ÂÆ ÇÈÉÊ also define an agency relationship as a

contract under which one or more persons Âthe principalÂsÊÊ engage another

person Âthe agentÊ to perform some service on their behalf which involves

delegating some decision making authority to the agent¿ Ëf both parties to the

relationship are utility maximizersÅ there is good reason to believe that the

agent will not always act in the best interests of the principal¿ ÀÁ¾ principal can

limit divergences from his interest by establishing appropriate incentives for the agent and by incurring monitoring costs designed to limit the aberrant activities of the agent¿ Ën additionÅ in some situationsÅ it will pay the agent to

expend resources Âbonding costsÊ to guarantee that he will not take certain

compensated if he does take such actionsÎ ÏÐweverÑ it is generally impossible

for the principal or the agent at zero cost to ensure that the agent will make optimal decisions from the principalÒs viewpointÎÓn most agency relationshipsÑ

the principal and the agent will incur positive monitoring and bonding costs

ÔnonÕpecuniary as well as pecuniaryÖÑ and in additionÑ there will be some

divergence between the agentÒs decisions and those decisions which would

maximize the welfare of the principalÎ×ØÙ dollar equivalent of the reduction in

welfare experienced by the principal as a result of this divergence is also a cost of the agency relationship and we refer to this latter cost as the Úresidual loss .

Auditors act as agents to principals when performing an audit and this relationship therefore brings with it similar concerns with regard to trust and confidence as the director-shareholder relationship, prompting questions about who is auditing the auditor. Agents (whether they are directors or auditors) may be trustworthy without a need for further incentives to align interests or monitoring mechanisms such as audit or increased regulation. However, the simple agency model would suggest that agents are untrustworthy. Like directors, auditors will have their own interests and motives to consider. For example, auditors may be risk averse and being conscious of their potential liability, introduce risk management processes that result in limitations in the scope of their work and caveats in their reports which principals may find frustrating. Auditor independence from the board of directors is of great

importance to shareholders and is seen as a key factor in helping to deliver audit quality. However, an audit necessitates a close working relationship with the board of directors of a company. The fostering of this close relationship has led (and continues to lead) shareholders to question the perceived and actual independence of auditors and to demand tougher controls and standards over independence to protect them. As far as independence and objectivity are concerned, auditors need to be conscious of threats to objectivity and apply suitable safeguards where necessary. Reputation is a key factor in promoting trust and auditor independence is an important quality that shareholders look for. Auditors have an important incentive to maintain independence to protect their reputation and thereby help them to retain and win audits (Institute of Chartered Accountants article, 2005)

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There are some definitions of auditing: a. Arens, Elder, Beasley (2011:11)

"Auditing is the accumulation and evaluation of evidence about information to determine and report en the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person.

b. American Accounting Association (AAA) Committee

American Accounting Association (AAA) Committee on Basic Auditing Concept provides auditing in general terms as follows:

"Auditing is a systematic process to obtain and assess the evidence objectively, relating to statements about actions and events economics, to determine the compatibility between these statements with the established criteria, and communicate the results to interested parties."

c. According Mulyadi (2009:9)

Definition of auditing is as follows: "A systematic process for obtaining and evaluating evidence objectively regarding statements about events and economic events, in order to determine the level of compatibility between the statements of the criteria have been established and the delivery of results to the concerned ".

d. According to Siti Kurnia Rahayu et al (2010:1)

A systematic process for obtaining and evaluating evidence objective information regarding the level of compatibility between actions or economic events with the criteria established, and report proceeds to the needy, where auditing should performed by a competent and independence.

In short auditing is a systematic process for obtaining audit evidence and evaluating it objectively the information level of compatibility between actions or economic events predetermined criteria, and report the results to the parties in need.

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Audits are generally divided into three categories, there are: audit report finance, audit compliance, and operational audits Arens et al (2011: 16)

a. Financial statement audit

Financial audit is an audit conducted by an external auditor the financial statements of their clients to give an opinion whether financial statements are prepared in accordance with the criteria have been set. The results of the audit distributed to parties outside the company such as creditors, shareholders, and the public tax office.

b. Audit Compliance

The purpose of audit is to determine whether the examined according conditions, regulations, and specific laws. The specified criteria in the compliance audit come from different resources. An example might be sourced from management in the form of internal control procedures. Audit compliance is usually called the internal audit function and doing with the employee of the company.

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c. Operational audit

Operational audit is a systematic review of the organization's operating activities conjunction with a specific purpose. In the operational audit, auditors expected to conduct an objective observation and analysis comprehensive review of the specific operations. The operations are to: 1). Assessing the performance, the performance compared with the policies, standards, and the goals set by management, 2). identifying opportunities and, 3). Provide recommendations for improvement or action further. The parties may request audits Operational management and third parties. Audit Results operations submitted to the requesting party audit implementation them.

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Arens et al. (2011:225) that the audit evidence as follows:

"Evidence is any information used by auditor to determine whether the information being audited is stated in accordance with established criteria."

According Mulyadi (2009:74) audit evidence is:

"Audit evidence is any information that supports the numbers or other information presented in the financial statements and can be used by the auditor as appropriate basic for stating opinion."

According to the State Auditing Standards issued by the Audit Board of the Republic of Indonesia No.01 of 2007:

17 The evidence must be sufficient, competent, and relevant must be obtained to be an adequate basis for the findings and conclusions of the reviewers."Most of the work at the time of carrying out the examination the examiner is primarily concerned with obtaining and evaluating evidence to support the judgment and ultimately their conclusions related to examination purposes. In evaluating the evidence, examiners consider whether they have obtained the evidence necessary to achieve the purpose of inspection.

For financial audits, audit evidence includes information from accounting records used to prepare the report and other relevant information. Accounting records generally include data from accounting entries and supporting documents. These include check and details of electronic fund transfers, invoices, contracts, general and subsidiary ledgers, and journal entries. Work sheets and spreadsheets supporting cost allocations, computations, reconciliations and disclosures are also examples. (VAGO article, 2012)

For performance audits, audit evidence gathered is usually broader than that obtained for the audit of a financial report. Some examples include strategic plans, tender documents, business cases, Cabinet submissions, consultant s reports, legal opinions and contracts with private providers. These documents can be accessed even if they are in draft form or subject to privacy restrictions. (VAGO article, 2012)

As we conclude that the audit evidence is any information used for auditor to support the auditor assurance on the information that has been audited in accordance with specified criteria. It can be concluded that the audit

18 evidence is any information that can be used by auditors as a basis and strengthening auditor opinions.

To determine which audit procedures to be used, the auditor can choose from several broad categories of evidence,there is types of evidence stated by Arens et al. (2011:231) :

a. Physical Examination

Physical examination or physical examination is an inspection or calculations performed by the auditors on tangible assets. The physical examination is a direct way to verify whether the assets were really there or not (objective existence), and on some level that there are assets that have recorded (completeness purposes)

b. Confirmation

Confirmation (confirmation) is the acceptance of an audit of a response written or oral from an independent third party that verifies the accuracy of the information requested. Confirmation is a form of inquiry to allow the auditor obtaining information directly from the outside. Confirmation divided into two kinds, positive and negative confirmation. Positive confirmation happened if the auditor asks and the recipient can provide a

19 response in all situations. Negative confirmation happen if the auditor asks the recipient to respond only, the information not true, and no additional testing is done when the response are not acceptable. In the usual case, the client makes a request to the outside parties in writing, but for the purposes of surveillance, the answer is sent directly to the auditor.

c. Documentation

Documentation is an inspection by the auditors on the documents and records of client to support the information presented, or should have been presented in the finance report. The document is also divided into two parts, internal documents and external documents. Internal documents are documents prepared and used and stored in the client organization without ever submitted to outsiders. While external documents are handled by someone outside of the client organization which is a party to perform transaction, but the document is now in the hands of the client or the immediately accessible by the client.

d. Analytical Procedures

Analytical procedures used comparisons and relationships between the data. This procedure includes calculations and used simple ratios, vertical analysis or similar items, comparison with the amount of historical data or

20 budget, to assess whether account balances or other data appear reasonable compared with the auditor expectation. The analytical procedure needed during the planning phase and completion of audit. This analytical procedure will produce analytical evidence.

The purpose of analytical procedures:

1) Understand the client's industry and business

2) Assessing the business entity capability to going concern 3) Shows the emergence of possible errors in the presentation

financial statements

4) Decreasing test of details audit

e. Inquiry

Inquiry is an attempt to obtain information orally or in writing from the client s response to the questions from auditor. Inquiring involves questions both orally and in writing. These questions can be made internally to management or employee clients, such as questions about inventory obsolescence or the possibility of its receivables are collectible, or externally ask lawyer associated with the possible outcomes of cases. The question produce can be oral and written evidence.

21 f. Re-calculation

Re-calculation involves re-checking the sample of calculations, performed by client. The most frequent application of this procedure is to re-calculation and reconciliation that has been made by the client. Examples include counting back the number, the cost of depreciation, interest, and others. This is procedure a mathematical proof.

g. Re-performance

Re-performance is the independent testing doing by auditors on accounting control or the procedures of client, which was originally performed as part of accounting system and internal control client.

h. Observation

Observation used the five senses to assess certain activities relating to observe or witness the implementation of the activities in the process. These activities can be a regular process of the types of transactions such as cash receipts, to see if the employee has been performed their duties in accordance with policies and procedures. Besides accuracy auditor may also observe employees in implementation of an annual physical inventory. So in this case the auditors only observe the physical inventory process. The different from inspecting is the auditor just look for a certain inventory to make its own assessment. Of these procedures the auditor will gain self

22 knowledge directly on the activities of the company in the form of physical evidence. The physical evidence is rarely met, because there is a risk that employees involved clients in activities that have realized the presence of the auditor.

As stated in the Act Law Number 11 Year 2008 on Information and Electronic Transactions Article 1 paragraph 1 (bhpn.go.id) set:

Electronic information is one or a set of electronic data, including but not limited to text, sound, images, maps, designs, photographs, electronic data interchange (EDI), electronic mail, telegram, telex, telecopy or similar, letters, signs, numbers, codes access, symbols, or perforations treated with sense or can be understood by people who are able to understand it.

In short, the typed of audit evidence today have two forms that are paper and electronic data. The form of audit evidence obtained depending on the audit procedures used.

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According to Arens, et. al. (2011 224):

"The basic every audit process is the evidence collected and evaluated by auditors ". Therefore, the auditor must have knowledge and sufficient expertise to gather relevant audit evidence, competent and adequate or reasonable. ". While the audit evidence according to Sawyer (2006: 304) :

"The best evidence are often called primary evidence, the most natural evidence and the most satisfactory evidence of the facts are being investigated. This evidence has strong relationship with reliability".

23 Competence, relevance, and timeliness are part of indicator the quality of audit evidence. (Arens, et al, 2011: 224)

Empirical auditing studies in Al-Hadi, 2008 in Zakari and Karim Menacere, 2012 and also professional standards such as ISA 500 (2010) have addressed the relationship between the quantity of audit evidence and its reliability and they found that the quality of audit evidence is influenced by its amount. For example, ISA 500 (2010) indicates that the quantity of the audit evidence needed is affected by the auditor s assessment of the risks of material misstatement and also by the quality of such audit evidence (IFAC, 2010). The amount of evidence to be obtained based on the following factors (Morariu et al., 2008 in Zakari and Karim Menacere, 2012):

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24 The indicator for the quality of audit evidence as stated by Pickett (2010:896) :

a. Sufficient

This is in line with materiality, level of risk and the level of auditors knowledge of the operation. Sufficient means enough with depends on circumstances. It should be enough to satisfy auditor's judgment or relevant persuade management to make any changes advocated by audit. Evidence is adequate when it meets the desired purpose.

b. Relevant

To ensure that evidence is directed to the control objective. Relevant brings into play the legal concept of admissibility, which requires material to relate specifically to the issues at hand. It is wrong to refer to matters that do not impact on the arguments that appear in the audit report, as way of blurring the issues at hand. The auditor must use professional judgment in deciding what is important.

c. Reliable

The information should be accurate, without bias and if possible produce by a third party or obtained directly by the auditor. The term reliable

25 stimulates image of the evidence being dependable, honest, sound and true .

d. Practical

One should weigh up the evidence required, the cost and time taken to Obtain it and sensitivity.

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Experience is a learning process and the development potential of adding good behavior of formal and non-formal education or can be defined as a process that brings a person to a pattern of behavior higher. Experience variables will be measured using indicators of work duration, frequency of inspection of the work that has been done, and the amount of training that has been followed. (Asih, 2006 in Bawono & Singgi 2010)

Psychologically, the experience will established personal identity, which will make a person more wisely both in thought and action, because someone will feel the experience of his position when he was in good condition when he was in a bad state. Someone will be more cautious in acting when he felt the fatal mistake. He will feel happy when he find solutions and will do the same when the same problem occurred. He will be satisfied when it

26 won the argument and will feel proud when she received the results of his work rewarded. (Noviari, 2005 in Bawono & Singgih 2010)

Staff auditors are typically quite new to the workforce and relatively young compared to client management, yet they are the auditors who meet with client management most frequently during fieldwork. Differences in age and experience can result in the staff-level auditor feeling overmatched and viewing the client meeting as intimidating. Further, client management may intentionally engage in intimidating behavior in order to prevent excessive interruptions of normal business during the audit (Overstock, 2007).

Bawono and Singgih (2010) adds that: the work carried out repeatedly is also a factor that can enhance the experience and make it faster and better at completing tasks, and the individual is more aware of the constraints that may be experienced.

In short the experience of auditor is some knowledge which the auditor get from doing audit the financial statements in terms of the length of time, many type assignment they do until the types of the companies that have handled.

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The nature of the audit is the process of verification by an independent person (impartially) to a management assertion using judgment and evidential matter. (I Wayan, 2010:145)

27 In decision-making, an auditor needs good judgment in order to produce good performance anyway. One consideration can be based on personality type of each individual. The Important of decisions faced by the auditor is to determine the type and number of appropriate audit evidence. The requirement to meet the belief that component of the client's financial statements and the overall report has been presented reasonable, and that the client's conduct effective internal control over financial reporting. (Arens et al 2011:224)

I Wayan (2010:146) states that: "Man with all limitations will determine the quality of the resulting judgment. Auditor's judgment is influenced by the perception of the situation. Auditor's judgment is influenced by education, culture and experience. "

Professional judgment obtained by the mentoring auditor, as given by Sawyer (2006:63) :

"Through the mentoring process development capabilities using professional judgment can also be accelerated by means of efficiently by a mentor."

There are four decisions about what evidence should be collected and how much to collect (Arens et al 2011:224):

a. Audit Procedures are Used

Audit procedures are some detailed instruction to explain the audit evidence which must be obtained during the audit.

28 b. The Sample Size which Selected for the Procedure

After selecting audit procedures, the auditor can resize samples from only one to all items in the population being tested.

c. The Items Selected from the Population

After determining the sample size for a given audit procedures, the auditor must decide which items in the population to be tested.

d. Time for Doing the Audit Procedures

Audit of financial statements generally include a period as one year. Typically, a new audit is being completed after a few weeks or a few months after the end of a period. Therefore, the time of the audit procedures varies from the beginning of the accounting period until the end of the period accounting.

In short, the implementation of an auditor require good judgment in decision- making is important in determining the type and amount of appropriate audit evidence, and consideration professionals can be influenced by education, culture, experience, and mentoring.

29

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To increase insight, the author conducted data collection literature. Here is a table of previous research:

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No. Researcher Research Variables

Similarity Differences Result of The Research 1 Devani Fridayani. (2012) Auditor Experience as independent variable (X1), Task Difficulty as independent variable (X2) and Audit Evidence Quality as dependent variable (Y). Auditor experience as independent variable and quality of audit evidence as dependent variable

1. Task difficulty as independent variable and the region of CPA firm are different 2. Using path

analysis method Auditor Experience and Task Difficulty have significant effect on Audit Evidence Quality.

2 Trimanto Setyo Wardoyo and Puti Ayu Seruni. (2011)

auditor experience (X1) and the auditor's professional judgment (X2) as independent variable and the quality of audit evidence (Y) as dependent variable Auditor experience and professional judgment as independent variable and quality of audit evidence as dependent variable

1. Method of research are using path analysis 2. The year of

doing research and the region of CPA firm are different Experience and professional judgment of auditors have significant effect on the quality of audit evidence collected 3 Irman Firmansyah. (2010) Auditor experience as independent variable (X) and collected audit evidence quality as dependent variable (Y). Auditor experience as independent variable and quality of audit evidence as dependent variable

1. independent variable in this thesis Just one and the region of CPA firm are different 2. Using Spearman s scale correlation Auditor experience has significant to audit evidence quality which collected.

30

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No Researcher Research Variables

Similarity Differences Result of The Research 4 Farida (2010) Auditor Experience as independent variable (X1), Task Difficulty as independent variable (X2) and Audit Evidence Quality as dependent variable (Y). Auditor experience as independent variable and quality of audit evidence as dependent variable

1. Task difficulty as independent variable and the region of CPA firm are different 2. Using path

analysis method Auditor Experience and Task Difficulty have significant effect on Audit Evidence Quality.

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Based on theoretical phenomenon all skill checks essentially directed to present the audit evidence are relevant in order to audit findings. With the development of the type and form of evidence is certainly needed those skilled in the art to gather the quality of evidence. Auditors are required to have qualification

ns to understand the criteria used and should be competent to determine the type and amount of evidence to be collected in order to reach conclusions right after the examination. (Arens et al, 2011:5).

In situational phenomenon before the information electronic transaction (ITE) law was passed, a form of evidence in litigation is evidence set forth in Law No. 8 1981 on the Law of Criminal Procedure Article 184 (bhpn.go.id). After the legalization of information electronic transaction Law, the

31 internal auditor should be more vigilant to evaluate company, because all forms of common practice helped by electronic media and can be used as audit evidence to be evaluated. Because today, for supporting evidence, must supported by at least 2 of 3 categories in information electronic transaction law (ITE) No.11 of 2008 (physical evidence, data, testimony) to reinforce his opinion. However, in practice auditor can be make inferences bias (audit bias), so giving rise the resistance or friction which not necessary by the auditee. (Valery G. recurrent, 2011:87).

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Abou-Seada and Abdel-Kader (2003) in Zakari and Karim Menacere (2012) state the role of professional expertise is significant in auditing decisions and especially in the evidence process. Libby and Frederick (1990) in Ida Suraida (2005), that the more experienced, the more the auditors can produce various kinds of expectations in explaining the findings of the audit.

Jarboh (2005) in Zakari and Karim Menacere (2012) on the effect of auditor experience on audit evidence revealed that the well-developed knowledge structures of experienced auditors help them to consider the risk, the cost and the time of searching for audit evidence. Bruynseels et al. (2007) in Zakari and Karim Menacere (2012) concluded that an increased level of experience is predicted to have an increasing effect on auditors processing of audit evidence. For example, audit evidence collected by a competent and

32 experienced auditor is expected to be more reliable than evidence from a novice (Bruynseels et al., 2007 in Zakari and Karim Menacere, 2012).

Gusnardi (2003:8) in Budi (2009) argues that the experience of the audit can be measured from the level of the position in the structure where the auditor worked, years of experience, a combination of hierarchy and years of experience, the expertise of auditors relating to the audit, and training have been followed by the auditor about the audit. Important issues related to the experience of the auditor will be associated with a level of accuracy auditors.

In short more experience in auditor can increase the ability of auditor to do auditing and gathering the qualified evidence which useful in making opinion for the company

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The basis for determining what is sufficient and appropriate evidence lies with the professional judgment of the auditor (Loughran, 2010). Meanwhile, according to I Wayan (2010:146) the nature of the audit is the process of verification by an independent person (impartially) to a management assertion using judgment (judgment) and historical evidence (evidential matter).

In short, auditor who have professional judgment easier to get the best evidence more competent and reliable.

33

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Found fairly fundamental error in company (PT. Kimia Farma, PT Great River International Tbk. and Satyam Computer Service Ltd.) but the auditor who being audit can t detect the fraud

The inability of the external auditors in auditing and tracing audit evidence that company proves that the auditor has less experienced and poor professional judgment

Basic theory: Agency Theory

The Effect of Experience and Professional Judgment towards Quality of Audit Evidence Collected

(PT PLN (Persero) of Certification Service- Southern Jakarta) Auditor Experience (X1)

Professional Judgment (X2)

Quality of Audit Evidence Collected

(Y)

Problem Identification, Hyphotesis CPA at South Jakarta, Questioner

Analysis Method

Validity and Reliability

Classic Assumption Test

Hypothesis Test

( Coefficient Determination test, t-Test, F-Test ) Conclusion

34 Based on the identification of the problem and the framework has been described previously, the hypothesis in this research are as follows:

Ha 1: There is significant effect of auditor experience towards quality of audit evidence collected.

Ha 2: There is a significant effect of auditor professional judgment towards quality of audit evidence collected.

Ha 3: There are significant effects between auditor experience and professional judgment towards quality of audit evidence collected.

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, X cause variable Y (Indriantoro and

Supomo, 2002: 90).

The purpose of this research is to know whether the effect of auditor s experience and consideration towards quality of audit evidence collected. The research carried out the research in CPA firm in South Jakarta region based on CPA firm directory book 2012:

1. CPA firm Drs Heroe Pramono & Partner 2. CPA firm Husni, Mucharam and Rasidi 3. CPA firm Kanaka Purwadiredja, Suhartono 4. CPA firm Razikun Tarkosunaryo

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Population is subject or object, which has certain qualities and characteristic are determined by a researcher. Thus, the population is not only people but also objects. Population is not only people but also objects or other natural objects. Population also not only quantity, but includes all of characteristic s subject or object (Sugiyono, 2009: 80). Sample is a part of number, and characteristic possessed by the population. Research did not take all the populations, because due to limited funds, manpower and time. So, sample can represent the population (Sugiyono, 2009: 81). Researcher use non-probability samplings are elements of the population do not have the same chance to select as a sample (Sugiyono, 2009: 84).

A researcher used purposive sampling. There are two types of purposive sampling method are judgmental sampling and quota sampling. The researcher used judgmental sampling; a type of sample selection is not random that the information had obtained by using certain consideration. Elements are selected as the sample population is restricted to elements, which can provide information under consideration (Indriantoro and Supomo, 2002: 131). In judgmental sampling, writer took a sample from employees of CPA firm which have included one of the criteria below (Ida Suraida, 2005) :

1. Junior auditor have work experience > 2 years 2. Senior Auditor

3. Supervisor

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Primary data is data which collected by researcher from source (Indriantoro and Supomo, 2002:146). Primary data obtained by through the questionnaire research and respondent ( as an objective research), type of questions are given closed question which may answer to determined in advance and respondent are not give the opportunity to choose another answers.

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This method requires to presence of contact or relationship between researcher and respondent. The data obtained is largely a descriptive data, but data collection is explaining cause and effect. (Indriantoro and Supomo, 2002: 145). The writer took questioner for this research. The questionnaire as an efficient technique, when researchers will know certainly about variables which will be measured and know to expect from the respondent (Sugiyono, 2009: 14). The researcher divided 3 structured questionnaire using category scale and numerical scale.

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In this study, data collection techniques that I use in obtaining the data are: a. Field Research

Field research is primary data collection by reviewing directly to the CPA. For this research, the writer took CPA firm in South Jakarta region. Primary data obtained through interviews and questionnaires, and observations with the parties concerned with the problem under study.

b. Literature Research

The literature research is a way to obtain secondary data which can provide theoretical basis to support the data-primary and secondary data obtained during the study as well as to support the discussion of the identification problem. These data are derived from books and other references pertaining to the object under study.

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The method of data analysis used in this study is a model of multiple regression analysis with the help of software SPSS 20 for Windows. Data analysis was performed by statistical analysis, testing the classical assumptions and hypothesis testing. Testing classical assumptions include normality test, multicollinearity and heteroscedasticity test.

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Validity test aims to determine the item of question good or not include in the questioner. If the validity said valid if the correlation value > 0.30 (Priyatno, 2012: 184). Reliability analyses do after validity test has been done. In reliability test, just the valid item will input in this test. The result of the reliability test is measure by Cronbach Alpha. The data said valid if the Cronbach Alpha > 0.60 (Priyatno, 2012: 187)

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Classical test assumption aims to determine the relationship between the variables in the data. Before conducting regression analyzes, first tested the classical assumptions to determine whether there is a relationship between the variables.

a. Normality Test

Normality test aims to test whether the regression model, or residual confounding variable has a normal distribution. There are two ways to detect whether or not residual normal distribution, i.e. the graph analysis and statistical tests (Ghozali, 2009). Normality test can be done by looking at the spread of the data (dots) on the diagonal axis of the

graph or by looking at the histogram from the residual. Basic decision-making, namely (Ghozali, 2009):

s t If the point spread around the diagonal line and follow the direction of

the diagonal line, the regression model to meet the assumptions of normality.

2) If the point spread away from the line or diagonal and do not follow the direction of the diagonal line, the regression model did not meet the assumptions of normality.

While tools such as statistical tests to Kolmogorov-Smirnov Z (1 - Sample KS), the basic decision-making (Ghozali, 2009):

1) If the value Asymp. Sig. (2-tailed) less than 0.05, then H0 is rejected. This means that the data are not normally distributed residuals.

2) If the value Asymp. Sig. (2-tailed) of more than 0.05, then H0 is accepted. This means that the data were normally distributed residuals.

b. Multicollinearity Test

Multicollinearity test aims to test whether the regression model found a correlation between the independent variables (Ghozali, 2009:95). A good regression model should not happen correlation between the independent variables. To detect the presence or absence of

multicollinearity in the regression model can be seen from the value of tolerance and the variance inflation factor opponent (VIF). Multicollinearity views of the tolerance value <0.10 or VIF> 10. Both of these measurements indicate each independent variable which is explained by the other independent variables.

c. Heteroscedasticity Test

Heteroscedascity test aims to test whether is in a regression model appear inequality of the residual and variance of observation to other observations.

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a. Test Coefficient of Determination (R ²)

The value of adjusted R Squared is always smaller than the value of R Squared. Adjusted R Squared penalizes to add more repressors. Unlike R2_{, adjusted} R2 _{will increase only if the absolute} t _{value of the} added variable is greater than 1. The closer it is to 1, the better is the fit. This means that the independent variable used could explain almost 100% of the variance in the dependent variable. We know that one of the measures of goodness of fit of a regression model is R2_{, which is defined} as:

R2_{, thus defined, of necessity lies between 0 and 1. The closer it is to 1,} the better is the fit.

b. Individual Parameter or Partial Significance Test. (t-Test)

T test aims to test how far the influence or impact of two independent variable in the socialization of individual are the auditor experience and auditor consideration in explaining the dependent variable is Quality of Audit Evidence. If the significance value > 0.05 then Ha is rejected, whereas if the significance value of < 0.05 Ha is accepted and we can compare between t-test and t-table, t-test > t-table.

c. Simultaneous Significance Testing (Test F)

The function of F-test is to see and understand the influence of both independent variables toward dependent variables. If the significance value > 0.05 then Ha is rejected, whereas if the significance value of < 0.05 Ha is accepted. To further convince this F test results it can be seen from the F table, with the following explain:

1) If the value of F test > F table, then Ho is rejected and Ha accepted.

d. Multiple Linear Regression Analysis

The multiple regression analysis can measured partially (indicated by coefficient of partial regression) jointly indicated by coefficient of multiple determination (R²), (Indriantoro and Supomo, 2009: 211). In this analysis, we can see how the independent variables, which are Auditor Experience (X1) and Auditor Professional Judgment (X2) effect the Quality of Audit Evidence (Y). Multiple linear regression analysis use to measure the mathematical relationship between more than two variables. A research model of multiple linear regression equation as follows:

Y = + 1X1 + 2X2 + e

Y = Quality of Audit Evidence

Coefficient 1 = Regression variable the Auditor Experience

Coefficient 2 = Regression variable the Auditor Professional Judgment

X1 = Auditor Experience

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Based on the title that the author presented the influence of experience and professional considerations of auditor to audit the quality of the evidence collected, the operational variables are as follows:

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Variable audit experience (X2) views of his old work as auditor and number assignment ever handled. This variable is measured by using indicators developed by Ida Suraida, (2005) in Puspa, (2008).

The questions from the questionnaire combined to audit experience are a long time to work as an auditor and how many assignments ever handled. Every questions measured by category scale.

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Variable auditor's judgment (Y) in this study were considered auditor. This variable is measured using indicators developed by Jenkins & Haynes (2003) in Puspa (2008). Auditor's judgment in This study is limited to the special audit in relation to the first case, which prompted consideration is how much confidence uncollectible accounts receivable balances will one debtor clients and how much recommend the client wishes to make adjustments for doubtful uncollectible.

The second case, which prompted judgments, is how much desire to expand the sample of audit evidence for the inventory trade accounts and how much his desire to make an adjustment to trade accounts merchandise inventory.

The third case, which prompted judgments, is how much desire to expand the indications engineering testing intercompany transactions group companies and how much desire recommending clients to make an adjustment to the purchase price difference in the client's financial statements.

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a. Independence from data providers

b. Effectiveness of the internal control structure c. Knowledge acquired by the auditor

d. Qualifications of the person providing the information e. Level of objectivity

Each question was measured by using a numerical scale of 5 alternative score to measure the attitudes of respondents.

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X1= Auditor Experience (Puspa 2008)

1. length of worked in an CPA firm 2. frequently absence of audit tasks 3. type of audit duties frequently

encountered by auditors

1 2 2 Interval X2= Professional Judgement (Jenkins & Haynes, 2003) in

(Puspa, 2008),

Case:

1. The collectability of Accounts Receivable

a. The desire to believe uncollectible accounts receivable clients

b. The desire to recommend clients to allocate receivables problematic to the allowance uncollectible accounts 2. Determining Materiality Level

a. The desire to expand the sample evidence audit to inventory trade accounts

b. The desire to recommend clients to make adjustments merchandise inventory 3. Transactions engineering

a. The desire to expand testing of engineering indications

transaction

b. The desire to recommend clients to make an adjustment to the difference between the purchase price in the report financial

3, 4, 5

6, 7, 8

9,10,11

Tûü ý þÿ

Rþ þû þ û ûýû ûüý þ þ

!

"

Y= Quality of Audit evidence Puti Ayu Seruni

(2011)

1# Independence from data

providers

$# Effectiveness of the internal

control structure

%# Knowledge acquired by the

auditor

&# Qualifications of the person

providing the information

'# Level of objectivity

12, 13 14, 15 16, 17 18, 19 20, 21

(8

CHAPTER IV

ANALYSIS AND DISCUSSION

A. General Description of Research Object

The object of this research is at Public Accounting Firma business entity that has obtained permission from the )ndonesian *inistry of Finance or its

extended authorities to provide a venue for public accountants in providing services+ )n the general understanding, public accountants or independent auditors

are accountants who have obtained permission from the *inistry of Finance or its

extended authorities to provide the respective services.A Public Accounting Firm is providing services that are referred in general to audit services+ Explanations of

these services are

-.+ Assurance services /+ Tax services

0+ Consulting services

1+ Accounting and Review Services 2+ 3itigation Support Services 4+ Fraud )nvestigation Services 5+ Personal Financial Planning

49 B. Descriptive Data

This study uses descriptive analysis to explain the ease in interpreting the results of further analysis6 The classification of data obtained is presented in

tabular form6 7t is intended to describe the condition of respondents as a whole

based on its characteristics6

The research was conducted using questionnaires that have been distributed in existing public accounting firm in South 8akarta6 The objects of

research are external auditors6 Distribution and the return of questionnaire start

from8une 9:;9 <=>until 8uly =?; 9 <=>6= << copies of questionnaires distribute to

the Public Accounting Firm in South 8akarta6

Table 4.1

Questioners Distribution

Questionnaires Total Percentage

Total questionnaires distributed = << = <<@

Total questionnaires not returned 9> 9>@

Total questionnaires returned from CPA firm

AA AA@

Total questionnaires selected BA

questioner from AA are not

completely fulfilledC

50 Total questionnaires will be

processed DEF questioner from GF

are not match with the criteria because EF questioners are junior

auditorH

I F I FJ

SourceK primer data processedLEFMN

On Table PQMshowed that from M FFquestionerLENnot returned by CPA

firm and GG the questioner had been returnedQ After thatL the writer checking

questioner collected from respondent whether it fulfill correctly or notQ There are

GFquestioners selected and ready to processQ But in caseL there is some problem

with junior auditor criteriaQ Respondent characteristics are measured with selected

respondents or auditors that have some criteriaD Oda SuraidaLEFFIHK

M Q Senior Auditor EQ Supervisor

So O decide to reduce the data with delete the junior auditor criteriaQ

FinallyL the characteristics of the respondentsLthere are I F respondents consisting

of auditors who can represent and be the respondentQ There are some distributed

51 Table 4.2

Distributed Questioners in each CPA firm

Source: primer data processed, 2013

Rn Table STU there is CPA firm at South Vakarta RegionT Because of limited

time and moneyW so the writer decides to choose X CPA firmT There are YZZ

exemplars of questioner divided for X CPA firm and XZ questioners are returned

without junior auditor criteriaT

Description Distributed Data Received Data Percentage (%) Public Accounting Firm

[\ CPA F]^_ Drs\ `aRba c

d^e_bf b & d e^gfa^

h\ idej]^_` klf]c

_ki `e^e_ & ^el]m]

n\ idej]^_

oef eo e

dk^em]^ampec

l k`e^ gbfb

q\ idej]^_

^er ]o kf

ge^o bl kf e^sb

t\ idej]^_kl_ef

& ^aoef

20 20 20 20 20 YX YZ X YZ YZ uXv XZv UXv XZv XZv wxyz{ XZ

52 Table 4.3

Description of Respondents

Age |} 39 years old

40 49 years old >50 30 20 0 60% 40% 0% Last education S1 S2 S3 30 20 0 60% 40% 0% Current position Senior Auditor Supervisor 35 15 70% 30%

Source: primer data processed, 2013

C. Analysis and Discussion

1. Validity Test

The questioner was divided into two variables those are auditor experience and professional judgment of auditor. According (Sugiyono, 2009:178) Test validity used to measure the legal valid or invalid of a questionnaire. A questionnaire said valid if the questions on the questionnaire are able to reveal something that will be on the questionnaire measure. The total score on test validity said valid if the number parameter of scores > 0.30.

53 Validity of the test item reliability analysis can be seen in the output of

"Item-Total Statistics" in the "Corrected Item-Total Correlation". The figures is a correlation between the numbers of each item with the total score of the items and have made corrections to the value of the correlation coefficient to avoid spurious overlap effects. The total score on test validity of said valid if the number of scores > 0.30. (Priyatno, 2012: 183-184).

Table 4.4

Result of Validity Test with Reliability Analysis for Audit Experience

Item-Total Statistics

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Deleted

PA1 2.28 .328 .714 .

PA2 1.76 .513 .714 .

Source: Processed primary data by spss 20.0

Based on table 4.3, all questions are about Auditor Experience variable. From the table, it can be seen that all of the questions are valid and have positive correlation, because score corrected item-total correlation is > 0.30 (Priyatno, 2012: 183-184).

54 Table 4.5

Result of Validity Test with Reliability Analysis for Professional Judgment of Auditor

Source: Processed primary data by spss 20.0

Based on table ~~€ all questions are Professional udgment of Auditor

variable From the table€ it can be seen that all of the questions are valid and

have positive correlation€ score corrected item‚total correlation is > ƒ„ƒ

…Priyatno€†ƒ‡†ˆ‡‰„‚‡‰~Š

Item-Total Statistics

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Deleted

PPA1 32.54 25.927 .572 .830

PPA2 32.42 25.800 .462 .843

PPA3 31.66 27.290 .447 .842

PPA4 31.88 23.047 .653 .821

PPA5 31.44 24.660 .685 .817

PPA6 31.44 24.700 .700 .816

PPA7 31.12 27.128 .518 .835

PPA8 31.10 26.378 .593 .828

55 Table 4.6

Result of Validity Test with Reliability Analysis for Quality of Audit Evidence Collected

Source: Processed primary data by spss 20.0

Based on table ‹Œ Ž all questions are Quality of Audit Evidence

CollectedŒ From the tableŽ it can be seen that all of the questions are valid and

have positive correlationŽ score corrected itemtotal correlation is > Œ‘

’PriyatnoŽ“ ”“•”– ‘”–‹—Œ

2. Reliability Test

Item-Total Statistics

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Deleted

KBBA1 36.06 22.017 .371 .860

KBBA2 35.58 21.840 .560 .843

KBBA3 35.18 22.640 .410 .854

KBBA4 35.06 20.956 .696 .832

KBBA5 35.38 19.342 .792 .820

KBBA6 35.54 21.764 .375 .862

KBBA7 35.08 20.034 .793 .822

KBBA8 35.30 22.378 .470 .849

KBBA9 35.24 20.023 .698 .829

56 Reliability tests can only be done after the instrument has confirmed its validity˜ Reliability testing in this study to indicate the level of internal

consistency reliability of the techniques used is to measure the coefficient of Cronbach™s Alpha with SPSS š›˜ Alpha values range from › œž questions can

be considered reliable if the alpha value is greater than ›˜Ÿ›˜

Table 4.7

Reliability Test for Auditor experience

Source: Processed primary data by spss 20.0

Reliability test for audit experience variable is shown on table   ˜Ÿ˜¡¢

seen as in the tablež£he Cronbach¤s alpha ›ž¥ šš means the data are reliable˜

Table 4.8

Reliability Test for Professional Judgment of Auditor

Source: Processed primary data by spss 20.0

Reliability test for Professional ¦udgment of Auditor variable is shown

on table   ˜§˜¡¢ seen as in the tablež£he Cronbach¤s alpha ›ž¥ § means the

data are reliable˜

Reliability Statistics

Cronbach's Alpha

N of Items

.822 2

Reliability Statistics

Cronbach's Alpha

N of Items

57 Table 4.9

Reliability Test for Quality of Audit Evidence Collected

Source: Processed primary data by spss 20.0

Reliability test for Quality of Audit Evidence Collected variable is shown on table ¨© ª ©As seen as in the table«¬he Cronbach­s alpha ®« ª¯° means

the data are reliable©

3. Classic Assumption Test

a©

± ²³mality Test

The purpose of the normality testis to determine whether the regression normally distributed or not© A good regression model is to have

normal or nearly normal distribution©

´n this research

« to detect whether

normally distributed data or not« it can be done with using graph analysis

namely histogram graphNormal Probability Plot (P-P Plot)and statistical analysis namelyµ²¶mogorov·Smirnov test©

Figure 4.1 Reliability Statistics

Cronbach's Alpha

N of Items

58 Normal P-Plot Graph

Source: Processed primary data by spss 20.0

Based on figure ¸¹º this research has done normality data

distribution test¹The result acquired from SPSS »¼statistic software¹ From

the P½P Plots diagram above¾ it can be seen that the plots are distributed

along the diagonal line¹ Thus¾ it can be concluded that the data used in this

research has a normal distribution¹ ¿ÀÁ Âver¾ graph analysis can emerge

different interpretation among reader¾ so that statistical analysis test is

needed to ensure the interpretation mistake for reading the graph¹Table ¸¹Ã

below will show the result of statistical analysis namely ÄÀÅmogorov½

59 Table 4.10

Kolmogorov-Smirnov Test

Source: Processed primary data by spss 20.0

The result ofKolmogorov-Smirnovtest on table ÇÈ ÉÊlso shows that the

value of Kolmogorov-Smirnov ËÈÇÉÌ with the level of significant

probability ËÈÍÌ ÎÏ the value of p > ËÈ ËÐÈ So the residual data is distributed

normallyÈ ThereforeÏ regression model used in this research has met the

normality test assumptionÈ

bÈ Ñulticollinearity Test

The aim from Ñulticolinearity Test is to test whether the regression

model found a correlation among the independent variablesÈ A good

regression model should there is no correlation among independent variablesÈ

Òn this researchÏ to detect the presence or absence of Ñulticolinearity can be

One-Sample Kolmogorov-Smirnov Test

Unstandardize d Residual

N 50

Mean 0E-7

Normal Parametersa,b

Std. Deviation 4.18400133

Absolute .069

Positive .063

Most Extreme Differences

Negative -.069

Kolmogorov-Smirnov Z .487

Asymp. Sig. (2-tailed) .972

a. Test distribution is Normal. b. Calculated from data.

60 done by calculating value of variance inflation factor ÓVÔFÕ of each

independent variableÖ

Table 4.11 Multicollinearity Test

Source: Processed primary data by spss 20.0

Based on table ×ÖØ aboveÙ the result shows that there is no value of

variance inflation factor ÓVÔFÕ of each independent variable which is more

than ÚÖÛ or less than ÛÚÖ So

Ù it can be concluded that there is no ÜulticolinearityÖ

cÖ Ý Þteroscedasticity Test

Coefficientsa Unstandardized Coefficients Standard ized Coefficie nts Collinearity Statistics Model B Std. Error Beta T Sig. Tolera nce VIF

(Constant) 21.041 4.704 4.473 .000

Auditor

Experiece 2.270 .516 .534 4.395 .000 .979 1.022 1

Professional Judgment of Auditor

.255 .109 .284 2.343 .023 .979 1.022

88

Normality Test

One-Sample Kolmogorov-Smirnov Test

Unstandardized Residual

N 50

Mean 0E-7

Normal Parametersa,b

Std. Deviation 4.18400133

Absolute .069

Positive .063

Most Extreme Differences

Negative -.069

Kolmogorov-Smirnov Z .487

Asymp. Sig. (2-tailed) .972

a. Test distribution is Normal. b. Calculated from data.

89

Multicollinearity Test

Coefficientsa Unstandardized Coefficients Standardi zed Coefficien ts Collinearity Statistics Model B Std. Error Beta t Sig. Tolera nce VIF

(Constant) 21.041 4.704 4.473 .000

PengalamanAudit 2.270 .516 .534 4.395 .000 .979 1.022

1

PertimbanganPro

fesional .255 .109 .284 2.343 .023 .979 1.022

Hypothesis Test

Model Summaryb

Model R R Square Adjusted R

Square

Std. Error of the Estimate

1 .567a .322 .293 4.272

a. Predictors: (Constant), PertimbanganProfesional, PengalamanAudit b. Dependent Variable: KualitasBahanBuktiAudit

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 406.713 2 203.356 11.142 .000b

Residual 857.787 47 18.251

1

Total 1264.500 49

a. Dependent Variable: KualitasBahanBuktiAudit

b. Predictors: (Constant), PertimbanganProfesional, PengalamanAudit

Coefficientsa

Unstandardized Coefficients Standardized

Coefficients Model

B Std. Error Beta

t Sig.

(Constant) 21.041 4.704 4.473 .000

PengalamanAudit 2.270 .516 .534 4.395 .000

1

PertimbanganProfesional .255 .109 .284 2.343 .023