The Impact of Audit Quality on Accrual Quality: Empirical Evidence from Non-Financial Companies on the Indonesia Stock Exchange

Eni Srihastuti

doi:10.55927/fjst.v4i12.338

Authors

Eni Srihastuti Universitas Islam Kadiri

DOI:

https://doi.org/10.55927/fjst.v4i12.338

Keywords:

Audit Quality, Accrual Quality, Corporate Governance, Emerging Markets, Finansial Reporting Quality

Abstract

This study investigates the relationship between audit quality and accrual quality in non-financial firms listed on the Indonesia Stock Exchange (2022–2024), with firm characteristics as moderating variables. Using 162 observations and Kothari’s performance-adjusted discretionary accrual model, multiple regression with moderator variables was applied. Audit quality was proxied by Big 4 affiliation, audit committee size, and long-term audit relationships. The findings show mixed results: audit committee size has a significant negative effect on accrual quality, while the interaction between long-term audit relationships and firm leverage significantly improves accrual quality. Although the study is limited to a three-year period and non-financial firms, it contributes to understanding audit effectiveness in emerging markets with high information asymmetry. Practically, the results highlight the importance of audit committee quality over size and encourage firms to consider how their characteristics interact with audit quality in governance decisions. The study offers original insights by demonstrating that the audit–accrual quality relationship in Indonesia is more complex than suggested in conventional audit literature.

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