Audit Quality, Financial Distress, and Corporate Governance Factors on Financial Report Integrity in Banking

Arif Nur Rahman

doi:10.69725/raida.v1i1.163

Authors

Arif Nur Rahman a. Department of Accounting, Faculty of Economics, Universitas Muhammadiyah Surakarta, Surakarta, Indonesia

DOI:

https://doi.org/10.69725/raida.v1i1.163

Keywords:

Audit quality, Financial distress, Audit committe

Abstract

Objective: Seeing this, the purpose of this study is to know how the limit of audit quality, financial distress, audit committee, independent commissioner and institutional ownership affects the integrity of financial statements in banks listed on the Indonesia stock exchange (ISE).
Methods: This study employs a quantitative research approach utilizing secondary data from bank company financial statements analyse through multiple regression and classical assumption tests.
Results: The results also show a positive effect of audit quality on the integrity of financial statements and a negative effect of financial distress on the transparency of financial reporting. The audit committee, independent commissioners, and institutional ownership, are shown to affect the integrity of financial statements positively but statistically not significant. Our findings indicate that whilst audit-quality is essential in the delivery of reliable financial reports, the mechanisms of governance described should be further refined to ensure their efficacy in promoting the financial transparency of firms in developing economies.
Novelty: This study offers insight into the determinants of financial statement integrity in the Indonesian banking sector thereby adding to transactions in this area. It sheds light on the significance of audit quality and the challenges that financial distress presents and provides new evidence regarding the limited effects of corporate governance, such as audit committees and independent commissioners.
Research Implications: The report highlights the importance of rigorous audits and intervention to address financial distress, as banks can produce higher quality audited financial statements. An implication to policymakers and regulators is to take time to enhance the effectiveness of governance mechanisms, encourage and explore alternatives to reducing financial distress but with greater transparency on financial statements. Future work is needed to investigate the impact of effective governance structures on financial statement integrity across industries and regions.

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Author Biography

Arif Nur Rahman, a. Department of Accounting, Faculty of Economics, Universitas Muhammadiyah Surakarta, Surakarta, Indonesia

Arif Nur Rahman., S.Ak., M.Ak.,

Department of Accounting, Faculty of Economics, Universitas Muhammadiyah Surakarta, Surakarta, Indonesia

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