The Importance of the Audit Committee in Improving Audit Quality

Oct 13, 2025 by magicalceylontours.com 129 views

The Effect of Audit Committee Characteristics, Audit Committee Competencies and Audit Committee Activities on Audit Quality in Property and Real Estate Companies Listed on the IDX

Introduction

The role of the audit committee in maintaining the quality of audit in public companies is increasingly recognized. In the property and real estate sector, the audit committee plays a crucial role in ensuring the transparency and financial accountability of companies listed on the Indonesia Stock Exchange (IDX). This study examines the influence of the characteristics, competencies, and activities of the audit committee on audit quality in property and real estate companies listed on the IDX.

The Importance of the Audit Committee in Improving Audit Quality

The audit committee is responsible for overseeing the financial reporting process, ensuring the accuracy and reliability of financial statements, and monitoring the company's internal control system. The audit committee's role is critical in maintaining the quality of audit, as it provides an independent and objective perspective on the company's financial performance. In the property and real estate sector, the audit committee's role is particularly important, as companies in this sector are often subject to complex financial transactions and may be vulnerable to financial misstatements.

Methodology

This study uses data on the annual report of 14 property and real estate companies listed on the IDX during the period 2010 to 2013. The sampling method used is purposive sampling, and the data analysis is carried out with multiple linear regression, T test, and the F test. The study examines the influence of the characteristics, competencies, and activities of the audit committee on audit quality, which is measured through the current accrual.

Results

The results of this study show that the age and sex of the audit committee members have a significant influence on audit quality. The statistical test shows that the value of t count is greater than t table with a significance value of 0.014 and 0.005, smaller than 0.05. This indicates that older members of the audit committee and a higher proportion of women in the committee are associated with better audit quality. However, this study found that education and frequency of audit committee meetings did not have a significant influence on audit quality.

Discussion

The results of this study provide some important implications for stakeholders. Firstly, the age and sex of audit committee members are important factors in improving audit quality. Companies need to consider these factors in the selection process for members of the audit committee. Secondly, education and frequency of audit committee meetings need to be further studied, as these factors may have a more complex influence on audit quality and require deeper examination. Finally, the importance of the role of the audit committee in improving audit quality in the property and real estate sector is highlighted, and independent, competent, and active audit committees can help companies increase transparency and financial accountability.

Conclusion

This study provides some important insights into the influence of the characteristics, competencies, and activities of the audit committee on audit quality in property and real estate companies listed on the IDX. The results of this study highlight the importance of considering the age and sex of audit committee members in improving audit quality. Furthermore, the study suggests that education and frequency of audit committee meetings may have a more complex influence on audit quality and require further study. This research opens opportunities for further research on the influence of the characteristics, competencies, and activities of the audit committee on audit quality in the property and real estate sector.

Recommendations

Based on the results of this study, the following recommendations are made:

Selection of Audit Committee Members: Companies should consider the age and sex of audit committee members in the selection process to improve audit quality.
Education and Training: Companies should provide education and training to audit committee members to enhance their competencies and improve audit quality.
Frequency of Audit Committee Meetings: Companies should ensure that the audit committee meets regularly to monitor the company's financial performance and internal control system.
Independence and Competence: Companies should ensure that the audit committee is independent, competent, and active to improve audit quality.

Limitations of the Study

This study has some limitations that should be noted. Firstly, the study uses a purposive sampling method, which may not be representative of all property and real estate companies listed on the IDX. Secondly, the study only examines the influence of the characteristics, competencies, and activities of the audit committee on audit quality, and does not consider other factors that may influence audit quality. Finally, the study only examines the influence of the audit committee on audit quality in the property and real estate sector, and does not consider the influence of the audit committee on audit quality in other sectors.

Future Research Directions

This study opens opportunities for further research on the influence of the characteristics, competencies, and activities of the audit committee on audit quality in the property and real estate sector. Some potential future research directions include:

Assessing the Influence of Experience and Professionalism: This study could assess the influence of experience and professionalism of audit committee members on audit quality.
Examining the Influence of Independence and Competence: This study could examine the influence of independence and competence of audit committee members on audit quality.
Investigating the Influence of Audit Committee Activities: This study could investigate the influence of audit committee activities, such as monitoring the company's financial performance and internal control system, on audit quality.

Conclusion

In conclusion, this study provides some important insights into the influence of the characteristics, competencies, and activities of the audit committee on audit quality in property and real estate companies listed on the IDX. The results of this study highlight the importance of considering the age and sex of audit committee members in improving audit quality. Furthermore, the study suggests that education and frequency of audit committee meetings may have a more complex influence on audit quality and require further study. This research opens opportunities for further research on the influence of the characteristics, competencies, and activities of the audit committee on audit quality in the property and real estate sector.
Frequently Asked Questions (FAQs) about the Effect of Audit Committee Characteristics, Audit Committee Competencies and Audit Committee Activities on Audit Quality in Property and Real Estate Companies Listed on the IDX

Q: What is the role of the audit committee in improving audit quality?

A: The audit committee plays a crucial role in maintaining the quality of audit in public companies. Its responsibilities include overseeing the financial reporting process, ensuring the accuracy and reliability of financial statements, and monitoring the company's internal control system.

Q: What are the characteristics of an effective audit committee?

A: An effective audit committee should have members with the right mix of skills, experience, and independence. The committee should also have a clear understanding of its responsibilities and the company's financial reporting process.

Q: How does the age and sex of audit committee members affect audit quality?

A: The results of this study show that the age and sex of audit committee members have a significant influence on audit quality. Older members of the audit committee and a higher proportion of women in the committee are associated with better audit quality.

Q: What is the significance of education and frequency of audit committee meetings on audit quality?

A: The results of this study show that education and frequency of audit committee meetings did not have a significant influence on audit quality. However, these factors may have a more complex influence on audit quality and require further study.

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

A: The results of this study have several implications for stakeholders. Firstly, companies should consider the age and sex of audit committee members in the selection process to improve audit quality. Secondly, education and frequency of audit committee meetings need to be further studied to understand their influence on audit quality.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the study uses a purposive sampling method, which may not be representative of all property and real estate companies listed on the IDX. Secondly, the study only examines the influence of the characteristics, competencies, and activities of the audit committee on audit quality, and does not consider other factors that may influence audit quality.

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

A: This study opens opportunities for further research on the influence of the characteristics, competencies, and activities of the audit committee on audit quality in the property and real estate sector. Some potential future research directions include assessing the influence of experience and professionalism of audit committee members on audit quality, examining the influence of independence and competence of audit committee members on audit quality, and investigating the influence of audit committee activities on audit quality.

Q: What are the recommendations based on this study?

A: Based on the results of this study, the following recommendations are made:

Selection of Audit Committee Members: Companies should consider the age and sex of audit committee members in the selection process to improve audit quality.
Education and Training: Companies should provide education and training to audit committee members to enhance their competencies and improve audit quality.
Frequency of Audit Committee Meetings: Companies should ensure that the audit committee meets regularly to monitor the company's financial performance and internal control system.
Independence and Competence: Companies should ensure that the audit committee is independent, competent, and active to improve audit quality.

Q: What are the benefits of an effective audit committee?

A: An effective audit committee can provide several benefits to a company, including improved audit quality, enhanced transparency and accountability, and better financial reporting.