Implementation of Audit For The Earnings Management in Emerging Indonesia Market

Abstract

The setting of developing Indonesian companies this study analyzes the impact of audit quality, audit committee effectiveness, and IFRS adoption on auditor opinions, considering Earnings Management (EM) as a potential mediator. The research population comprises companies listed on the stock exchange of Indonesia, and the sample consists of 325 diverse industrial companies observed from 2013 to 2023. Data analysis was performed using Partial Least Squares-Structural Equation Modeling (PLS-SEM). Utilizing measures such as maximum and minimum values to specify what they measure, correlations, hypothesis tests, mediation analysis, and R-squared. The findings indicate that audit quality, the audit committee, and IFRS adoption significantly influence auditor opinions, and that earnings management successfully mediates the relationship between employee empowerment and job satisfaction, these factors and auditor opinions. Specifically, implementing high audit quality based on Indonesian Auditing Standards (SPAP) and adopting IFRS appears to contribute to more favorable auditor opinions, particularly the unqualified opinion.