TIME BUDGET PRESSURE ON THE RELATION BETWEEN PUBLIC TRUST AND AUDITOR INDEPENDENCE IN PUBLIC ACCOUNTING FIRM
Abstract
The number of cases that occur involving the auditor or accountant raises a big question mark in the community about the responsibility of the auditor. The literature related to auditor behavior has been discussed by researchers to look for several possible causes of fraud. Although based on the AICPA rules that an auditor must have integrity, independence, serve the public, and have a level of trust in the public but the demands of work as an auditor make it very vulnerable to stress. The purpose of this study is to examine the role of time budget pressures in weakening public trust and auditor independence. This research will use quantitative methods with data collection methods by the survey. A total of 87 questionnaires collected from auditors working at Big 4 and Non-Big 4. Public Accountant Firms. The test was conducted using SEM-PLS. The results of this study indicate that time budget pressure is not influence to auditor independence. However, public trust is proven to have a relationship with auditor independence.
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References
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Otley, D. T., and Pierce, B.J. (1996). Auditor Time Budget Pressure: Consequences and Antecedents. Accounting, Auditing & Accountability Journal, 9 (1), 31-58.
Pierce, B., and Seeney, B. (2004). Cost-quality Conflict in Audit Firms: An Empirical Investigation. European Accounting Review, 13 (3), 779-812.
Porter, B., Simon, J. and Hatherly, D. (2003). Principles of External Auditing, John Wiley & Sons, New York, NY.
Sarstedt, M., Ringle, C. M., Smith, D., Reams, R., and Hair, J. F. (2014), “Partial Least Squares Structural Equation Modeling (PLS-SEM): A Useful Tool for Family Business Researchers," Journal of Family Business Strategy, 5(1), 105-115.
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Svanberg, J., and Ohman, P. (2013). Auditors’ Time Pressure: Does Ethical Culture Support Audit Quality? Managerial Auditing Journal, 28(7), 572 - 591.
Svanstrom, T. (2016). Time Pressure, Training Activities, and Dysfunctional Auditor Behaviour: Evidence from Small Audit Firms. International Journal of Auditing, 20, 42-51.
Yuen, D. C. Y., Law, P. K. F., Lu, C., and Qi Guan, J. (2013). Dysfunctional Auditing Behavior: Empirical Evidence on Auditors’ Behavior in Macau. International Journal of Accounting & Information Management, 21 (3), 209-226.
Zand, D. E. (1972). Trust and Managerial Problem Solving. Administrative Science Quarterly, 229-239.
Arens, A.A., Loebbecke, J. K., Lemon, W. M. and Splettstoesser, I. B. (2002). Auditing and Other Assurance Services, 9th ed., Prentice-Hall, Toronto.
Bazerman, M. H., Morgan, K. P., and Loewenstein, G. F. (1997). The Impossibility of Auditor Independence. Sloan Management Review, 38 (4), 89-94.
Brown, P. A., Stocks, M., H., and Wilder, W. M. (2007). Ethical Exemplification and the AICPA Code of Professional Conduct: An Empirical Investigation of Auditor and Public Perceptions”, Journal of Business Ethics, 71, 39 - 71
Butler, J. K., and Cantrell, R. S. (1984). A Behavioral Decision Theory Approach to Modelling Dyadic Trust in Superiors and Subordinates. Psychological Reports, 19-28.
Carey, P., and Simnett, R. (2006). Audit Partner Tenure and Audit Quality. The Accounting Review, 81(3), 653-676.
Cook, E., and Kelly, T. (1991). An International Comparison of Audit Time-Budget Pressures: The United States and New Zealand. The Woman CPA, 53(2), 25-30.
Cooper, C., Dewe, P., and O’Driscoll, M. (2001). Organizational Stress: A Review and Critique of Theory, Research, and Applications. Thousand Oaks, California: Sage Publications.
Coram, P., Ng, J., and Woodliff, D. (2003). A Survey of Time Budget Pressure and Reduced Audit Quality among Australian Auditors. Australian Accounting Review, 13(1), 38-45.
Duska, R., Duska, B, S., and Ragatz. J, A. (2011). Accounting Ethics, 2nd Edition, Wiley-Blackwell.
Elinor, O., and James, W. (2003). Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research. New York: Russel Sage Foundation.
Etteredge, M. L., Bedard, J. C., and Johnstone, K. M. (2008). Empirical Tests of Audit Budget Dynamics. Behavioral Research in Accounting, 20 (2), 1-18.
Falk, H., Lynn, B., Mestelman, S., and Shehata, M. (1999). Auditor Independence, Self-interested Behaviour, and Ethics: Some Experimental Evidence. Journal of Accounting and Public Policy, 18, 395-428.
Fornell, C., & Larcker, D. F. (1981). “Erratum: Structural Equation Models with Unobservable Variables and Measurement Error: Algebra and Statistics”. Journal of Marketing Research, 18(3), 328-388.
Glover, S. (1997). The Influence of Time Pressure and Accountability on Auditors' Processing of Non-Diagnostic Information. Journal of Accounting Research, 35(2), 213-226.
Gundry, L., and Liyanarachchi, G. (2007). Time Budget Pressure, Auditors’ Personality Type, and the Incidence of Reduced Audit Quality Practices. Pacific Accounting Review, 19(2), 125-152.
Hair, J. F., Hult, G. T., Ringle, C., and Sarstedt, M. (2013), A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), SAGE Publications.
Hudaib, M., and Haniffa, R. (2009). Exploring Auditor Independence: an Interpretive Approach. Accounting, Auditing & Accountability Journal, 22, 221-246.
International Ethics Standards Board for Accountants. (2012). Handbook of the code of ethics for professional accountants. Retrieved from http://www.ifac.org/sites/default/files/publications/files/2012-IESBAHandbook.pdf
Kelley, T., and Margheim, L. (1990). The Impact of Time Budget Pressure, Personality, and Leadership Variables on Dysfunctional Auditor Behavior. Auditing: A Journal of Practice & Theory, 9(2), 21-42.
Liyanarachchi, G. A., and McNamara, S. M. (2007). Time Budget Pressure in NewZealand Audits. University of Auckland Business Review, 9 (2), 60-68.
McNair, C. (1991), “Proper Compromises: The Management Control Dilemma in Public Accounting and Its Impact on Auditor Behavior," Accounting, Organizations and Society, 16(7), 635-653.
Mohamed, D. M., and Habib, M H. (2013). Auditor Independence, Audit Quality and The Mandatory Auditor Rotation in Egypt. Education, business, and society: contemporary middle eastern, 6(2), 116-144.
Moore, D. A., Tetlock, P. E., Tanlu, L., and Bazerman, M. H. (2006). Conflicts of Interest and the Case of Auditor Independence: Moral Seduction A Strategic Issue Cycling. Academy of Management Review, 31 (1), 10.
Nunnaly, J. C. (1967). Psychometric Theory. New York: McGraw-Hill.
Otley, D. T., and Pierce, B.J. (1996). Auditor Time Budget Pressure: Consequences and Antecedents. Accounting, Auditing & Accountability Journal, 9 (1), 31-58.
Pierce, B., and Seeney, B. (2004). Cost-quality Conflict in Audit Firms: An Empirical Investigation. European Accounting Review, 13 (3), 779-812.
Porter, B., Simon, J. and Hatherly, D. (2003). Principles of External Auditing, John Wiley & Sons, New York, NY.
Sarstedt, M., Ringle, C. M., Smith, D., Reams, R., and Hair, J. F. (2014), “Partial Least Squares Structural Equation Modeling (PLS-SEM): A Useful Tool for Family Business Researchers," Journal of Family Business Strategy, 5(1), 105-115.
Shaub, M. K. (2015). Trust as A Threat to Independence. Research on Professional Responsibility and Ethics in Accounting, 9, 169-188.
Svanberg, J., and Ohman, P. (2013). Auditors’ Time Pressure: Does Ethical Culture Support Audit Quality? Managerial Auditing Journal, 28(7), 572 - 591.
Svanstrom, T. (2016). Time Pressure, Training Activities, and Dysfunctional Auditor Behaviour: Evidence from Small Audit Firms. International Journal of Auditing, 20, 42-51.
Yuen, D. C. Y., Law, P. K. F., Lu, C., and Qi Guan, J. (2013). Dysfunctional Auditing Behavior: Empirical Evidence on Auditors’ Behavior in Macau. International Journal of Accounting & Information Management, 21 (3), 209-226.
Zand, D. E. (1972). Trust and Managerial Problem Solving. Administrative Science Quarterly, 229-239.
Published
2019-09-30
How to Cite
Yustina, A., & Islami, I. (2019). TIME BUDGET PRESSURE ON THE RELATION BETWEEN PUBLIC TRUST AND AUDITOR INDEPENDENCE IN PUBLIC ACCOUNTING FIRM. ACCRUALS (Accounting Research Journal of Sutaatmadja), 3(2), 155-165. https://doi.org/10.35310/accruals.v3i2.100
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Articles
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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
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