抽象的な

Impact of ISA 600 on market share and audit quality in Indonesia.

Fitriany F*, Viska A, Aria FM, Vitria I

ISA 600 states that the auditor of the parent company (the group auditor) has full responsibility for all consolidated financial statements, including those of subsidiaries audited by other auditors (component auditors). This study aims to examine the impact of the implementation of ISA 600 on audit quality and market share in Indonesia, using mixed methods. The primary data were collected from FGD and questionnaires (244 respondents), while the secondary data were obtained from 1,062 firm years (2011-2016) of the parent company financial statements. The regression results show that the implementation of ISA 600 had a negative impact on audit quality. Additional testing found that the impact was greater when the group auditor was from a non-Big four firm. After ISA 600 implementation in Indonesia, many subsidiaries have switched to group auditors, which are usually Big 4 or Second-Tier, meaning small accounting firms have lost many clients. The questionnaires distributed to auditors and FGDs show consistent results. According to ISA 600, group auditors must supervise and inspect the component auditors’ audit programs and working papers. In reality, however, group auditors do not want to bear the risk of supervising other auditors’ work, so require subsidiaries to be only audited by them.