Independent Commissioner and Audit Committee

Oct 13, 2025 by talynt.org 98 views

Analysis of the Effect of Audit Tenure, Audit Report Lag, Audit Quality, Financial Distress, Cash Flow, and Corporate Governance on the Provision of Going-Concern Audit Opinion in Plantation Companies Registered on the IDX (2012-2015)

Introduction

The provision of going-concern audit opinions is a critical aspect of auditing, as it reflects the auditor's assessment of a company's ability to continue its business operations in the near future. In the context of plantation companies listed on the Indonesia Stock Exchange (IDX), the going-concern audit opinion is particularly important, given the industry's unique characteristics and challenges. This study aims to analyze the influence of various factors, including audit tenure, audit report lag, audit quality, financial distress, cash flow, and corporate governance mechanisms, on the provision of going-concern audit opinions in plantation companies registered on the IDX during the 2012 to 2015 period.

Research Methodology

This study employed a quantitative approach, using a sample of 11 plantation companies listed on the IDX. The data was obtained from financial statements and auditor reports published on the official IDX website. The logistics regression method was used to analyze the data, and the hypothesis test was carried out using a Wald test for partial and likelihood testing for simultaneous testing. This approach allowed researchers to evaluate the effect of each variable on the auditor's decision in giving a going-concern opinion.

Research Results

The results of the study show that there are several variables that have a significant influence on the going-concern audit opinion:

Audit Tenure: The study found a negative effect of audit tenure on the going-concern audit opinion. This suggests that auditors who have been working with a company for a longer period may be less objective in their assessment of the company's condition.
Financial Distress: The study also found a negative influence of financial distress on the going-concern audit opinion. This indicates that companies that have financial difficulties tend to receive negative going-concern opinions.
Independent Commissioner and Audit Committee: The study found a negative effect of the existence of independent commissioners and audit committees on the going-concern audit opinion. This suggests that these corporate governance mechanisms may not be fully effective in practice.
Audit Report Lag: The study found a positive influence of audit report lag on the going-concern audit opinion. This suggests that a longer time in the preparation of audit reports can provide more time for auditors to evaluate financial information as a whole.
Audit Quality and Cash Flow: The study also found a positive effect of audit quality and cash flow on the going-concern audit opinion. This indicates that high audit quality and healthy cash flow increase the auditor's confidence in providing going-concern opinions.
Managerial Ownership and Centralized Ownership: The study found a positive influence of managerial ownership and centralized ownership on the going-concern audit opinion. This suggests that higher levels of ownership by the main manager or shareholder tend to contribute to the company's sustainability.

Conclusion

Overall, this study found that all the variables studied had a significant influence on the provision of the going-concern audit opinion simultaneously. This finding is important for practitioners and stakeholders to understand the factors that influence auditor decisions in assessing the survival of the company, especially in the plantation industry that has its own characteristics and challenges. With the increase in awareness of the role of corporate governance and audit quality, companies are expected to be more proactive in improving transparency and accountability, in order to increase the trust of investors and markets.

Implications of the Study

The findings of this study have several implications for practitioners and stakeholders:

Audit Tenure: Auditors should be aware of the potential negative effect of audit tenure on the going-concern audit opinion. This suggests that auditors should strive to maintain their objectivity and avoid being influenced by their long-term relationship with the company.
Financial Distress: Companies that are experiencing financial difficulties should be aware of the potential negative effect of financial distress on the going-concern audit opinion. This suggests that companies should take proactive steps to address their financial difficulties and improve their financial health.
Corporate Governance: The existence of independent commissioners and audit committees is not sufficient to ensure the effectiveness of corporate governance. Companies should strive to improve their corporate governance mechanisms to ensure that they are effective in practice.
Audit Quality: Auditors should strive to maintain high audit quality to increase the auditor's confidence in providing going-concern opinions.
Cash Flow: Companies should strive to maintain healthy cash flow to increase the auditor's confidence in providing going-concern opinions.

Limitations of the Study

This study has several limitations:

Sample Size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data Availability: The data used in this study is secondary data, which may be subject to limitations and biases.
Methodology: The logistics regression method used in this study may not be the most appropriate method for analyzing the data.

Future Research Directions

This study provides several avenues for future research:

Exploring the Effect of Other Variables: Future research should explore the effect of other variables, such as board composition, executive compensation, and financial reporting quality, on the going-concern audit opinion.
Examining the Effect of Industry Characteristics: Future research should examine the effect of industry characteristics, such as the level of competition and the degree of regulation, on the going-concern audit opinion.
Investigating the Effect of Audit Firm Characteristics: Future research should investigate the effect of audit firm characteristics, such as the size and reputation of the audit firm, on the going-concern audit opinion.

Conclusion

In conclusion, this study provides valuable insights into the factors that influence the provision of going-concern audit opinions in plantation companies registered on the IDX during the 2012 to 2015 period. The findings of this study have several implications for practitioners and stakeholders, and provide several avenues for future research.
Q&A: Analysis of the Effect of Audit Tenure, Audit Report Lag, Audit Quality, Financial Distress, Cash Flow, and Corporate Governance on the Provision of Going-Concern Audit Opinion in Plantation Companies Registered on the IDX (2012-2015)

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the influence of various factors, including audit tenure, audit report lag, audit quality, financial distress, cash flow, and corporate governance mechanisms, on the provision of going-concern audit opinions in plantation companies registered on the IDX during the 2012 to 2015 period.

Q: What is the significance of this study?

A: This study is significant because it provides valuable insights into the factors that influence the provision of going-concern audit opinions in plantation companies. The findings of this study have several implications for practitioners and stakeholders, and provide several avenues for future research.

Q: What are the key findings of this study?

A: The key findings of this study are:

Audit Tenure: The study found a negative effect of audit tenure on the going-concern audit opinion.
Financial Distress: The study found a negative influence of financial distress on the going-concern audit opinion.
Independent Commissioner and Audit Committee: The study found a negative effect of the existence of independent commissioners and audit committees on the going-concern audit opinion.
Audit Report Lag: The study found a positive influence of audit report lag on the going-concern audit opinion.
Audit Quality and Cash Flow: The study found a positive effect of audit quality and cash flow on the going-concern audit opinion.
Managerial Ownership and Centralized Ownership: The study found a positive influence of managerial ownership and centralized ownership on the going-concern audit opinion.

Q: What are the implications of this study for practitioners and stakeholders?

A: The implications of this study for practitioners and stakeholders are:

Audit Tenure: Auditors should be aware of the potential negative effect of audit tenure on the going-concern audit opinion.
Financial Distress: Companies that are experiencing financial difficulties should be aware of the potential negative effect of financial distress on the going-concern audit opinion.
Corporate Governance: The existence of independent commissioners and audit committees is not sufficient to ensure the effectiveness of corporate governance.
Audit Quality: Auditors should strive to maintain high audit quality to increase the auditor's confidence in providing going-concern opinions.
Cash Flow: Companies should strive to maintain healthy cash flow to increase the auditor's confidence in providing going-concern opinions.

Q: What are the limitations of this study?

A: The limitations of this study are:

Sample Size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data Availability: The data used in this study is secondary data, which may be subject to limitations and biases.
Methodology: The logistics regression method used in this study may not be the most appropriate method for analyzing the data.

Q: What are the future research directions based on this study?

A: The future research directions based on this study are:

Exploring the Effect of Other Variables: Future research should explore the effect of other variables, such as board composition, executive compensation, and financial reporting quality, on the going-concern audit opinion.
Examining the Effect of Industry Characteristics: Future research should examine the effect of industry characteristics, such as the level of competition and the degree of regulation, on the going-concern audit opinion.
Investigating the Effect of Audit Firm Characteristics: Future research should investigate the effect of audit firm characteristics, such as the size and reputation of the audit firm, on the going-concern audit opinion.

Q: What are the practical implications of this study for plantation companies?

A: The practical implications of this study for plantation companies are:

Audit Tenure: Plantation companies should be aware of the potential negative effect of audit tenure on the going-concern audit opinion.
Financial Distress: Plantation companies that are experiencing financial difficulties should be aware of the potential negative effect of financial distress on the going-concern audit opinion.
Corporate Governance: Plantation companies should strive to improve their corporate governance mechanisms to ensure that they are effective in practice.
Audit Quality: Plantation companies should strive to maintain high audit quality to increase the auditor's confidence in providing going-concern opinions.
Cash Flow: Plantation companies should strive to maintain healthy cash flow to increase the auditor's confidence in providing going-concern opinions.

Q: What are the future research directions for this study?

A: The future research directions for this study are:

Replication Study: A replication study should be conducted to verify the findings of this study.
Extension Study: An extension study should be conducted to explore the effect of other variables on the going-concern audit opinion.
Qualitative Study: A qualitative study should be conducted to gain a deeper understanding of the factors that influence the provision of going-concern audit opinions.