JRSSEM 2021, Vol. 01, No. 2, 116 – 124
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI : 0.36418/jrssem.v1i2.16 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
THE EFFECT OF AUDIT QUALITY AND FINANCIAL
CONDITIONS ON GOING CONCERN AUDIT OPINION
(STUDY ON FOOD AND BEVERAGE MANUFACTURING
COMPANIES LISTED ON THE INDONESIA STOCK
EXCHANGE)
Dwi Kartika Sari*
STIE STAN Indonesia Mandiri
e-mail: uwikartika22@gmail.com
*Correspondence: uwikartika22@gmail.com
Submitted: 14 September 2021, Revised: 23 September 2021, Accepted: 27 September 2021
Abstract. This research was conducted to determine how to influence the quality of auditing and
financial condition of the going concern audit opinion on the company Food and Beverages which
is listed on the Stock Exchange in 2010-2014. The method used in this research is descriptive and
verification. A descriptive study serves to illustrate the characteristics of a population. While
research verification is used to reexamine the results of previous studies with this gracious purpose
correctness of the results of previous studies. The population in this study amounted to 22
companies Food and Beverages in the study period from 2010 to 2014. Then the 10 companies in
the sample were obtained by using the purposive sampling method of sample collection
techniques with particular consideration. Data were obtained from the Indonesian Stock Exchange.
Analysis of the data used in this research is the logistic regression analysis. Analysis of the study
data processing using the software Microsoft Office Excel 2007 and SPSS for windows 20 o'clock.
The coefficient of determination R2 shows that the variable quality of auditing and financial
condition is explained by the independent variable by 3.8% and 96.2% influenced by other factors
outside the model. The variable quality audit has no significant effect on the going concern audit
opinion. And financial condition variables, not significant affect ongoing concern audit opinion.
Keywords: quality audit; financial condition; going concern audit opinion.
Dwi Kartika | 117
DOI : 0.36418/jrssem.v1i2.16 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
INTRODUCTION
Vision and mission as well as the goals
to be achieved together. The sustainability
of the company's life (going concern) is
considered necessary to be used as a
reference in making decisions in the future.
One measure to assess the sustainability of
the company's life is to measure the
important variables in it through the
financial statements issued by the company
(Harris & Meiranto, 2015).
Going concern is the survival of a
business entity and is an assumption in the
financial reporting of an entity so that if an
entity experiences the opposite condition,
the entity becomes problematic (Zulfikar &
Syafruddin, 2013).
Auditors have an important role in
bridging the interests of investors as users
of financial statements and the important
role ofaudit opinions going concern in
companies as providers of financial
statements (Noverio & Dewayanto, 2011).
Company data will be more easily trusted
by investors and other users of financial
statements if the financial statements
reflect the performance and condition of
the company and have received a fair
statement from the auditor. By using
audited financial statements, users of
financial statements can make decisions
correctly in accordance with the actual
reality (Ayuningtyas, 2018).
Theaudit opinion going concern issued
by the auditor includes an assessment of
the important variables in the financial
statements as well as the factors that affect
the possibility of receiving aaudit opinion
going concern.
Factors that can affect the possibility
of receiving aaudit opinion going concern
are Audit Quality, Financial Condition,
Auditor Opinion, Company Growth,
Company Size, Debt Default, Previous Year
Auditand OpinionOpinion Shopping (Irfana
& Muid, 2012). The author is interested in
researching the factors of audit quality and
financial condition. Audit quality is the
quality of an auditor as indicated by a
reliable audit report and in accordance with
auditing standards. Large audit firms have
more incentives to detect and
reportproblems of their going concern
clients. Auditors are responsible for
providing high quality information that will
be useful for decision making by users of
financial statements. Auditors who have
good audit quality are more likely to issue
aaudit opinion going concern if the client
has a problem regarding going concern
(Aiisiah & Pamudji, 2012).
While the financial condition
describes the soundness of the company in
the possibility of the company receiving
aaudit opinion going concern. The
company's financial condition is the true
level of company health. In companies that
are sick, there are manyproblems going
concern (Aiisiah & Pamudji, 2012).
According to (Keown, A.J., Scott, D.F.,
Martin, J.D., Petty, 2011) stated that the
more disturbed or deteriorating the
company's condition is, the more likely it is
that the company will receive aaudit
opinion going concern. On the other hand,
in companies that have never experienced
financial difficulties, the auditor has never
issued aaudit opinion going concern
(Nanda, 2015).
This research was conducted because
of the inconsistency of the results of
118 | The Effect of Audit Quality and Financial Conditions on Going Concern Audit Opinion
(Study on Food and Beverage Manufacturing Companies Listed on The Indonesia Stock
Exchange)
previous studies regarding the factors that
affectaudit opinion going concern.
According to research (Dewayanto, 2011)
audit quality factors and financial condition
affectaudit opinion going concern.
According to (Kartika, 2012) From
his research, the audit quality factors and
financial condition have no significant
effect onaudit opinion going concern. The
same thing was stated by (Werastuti, 2013)
and (Nanda, 2015) in their research which
resulted that the financial condition factor
had no significant effect onaudit opinion
going-concern.
In another study, according (Meriani &
Krisnadewi, 2012) it was found that the
financial condition factor had a significant
negative effect onaudit opinion going-
concern. This is supported by (Azizah &
Anisykurlillah, 2014) from their research
which results that financial conditions have
a significant negative effect onaudit
opinions going concern.
In a study conducted by (Effendi, 2019)
it was found that the audit quality factor
had an insignificant effect and financial
conditions had a significant negative effect
onaudit opinion going concern.
Based on the results of these
inconsistencies, the authors are interested
in conducting research with the title
"Influence Of Audit Quality And Financial
Conditions On Going Concern Audit
Opinions" (Studies on Manufacturing
Companies in theSector Food and
Beverages Listed on the Indonesia Stock
Exchange).
METHODS
The research method used in this
research is descriptive method and
verification method. Descriptive method is
a statistical method used to analyze data
and describe or provide an overview of the
object under study through sample or
population data as it is, without analyzing
and making conclusions that apply to the
public (Sugiyono, 2013). The verification
method is a method that shows the
influence between several variables used to
test (Yani et al., n.d.). The effect or the form
of the causal relationship between the
independent variable and the dependent
variable can be known from the verification
research method. This study uses 3
variables consisting of two independent
variables (free), namely audit quality (X1)
and financial condition (X2) and one
dependent variable (bound) namelyaudit
opinion going concern (Y). The three
variables were analyzed using logistic
regression analysis to determine the
relationship between variables so that it
can be seen whether the proposed
hypothesis is correct or not.
In this study, samples were taken from
the population using a purposive sampling
method with the following criteria:
1. Manufacturing companies in thesector
Food and Beverages listed on the
Indonesia Stock Exchange (IDX) from
2010 to 2014.
2. Manufacturing companies in thesector
Food and Beverages that has published
all financial statements in full and
attached an independent auditor's
report during the observation period
from 2010 to 2014.
Dwi Kartika | 119
3. Manufacturing companies in thesector
Food and Beverages whose financial
statements are presented in rupiah
currency.
Sources of data used in this study is
secondary data. This study uses secondary
data sourced from the financial statements
ofcompanies Food & Beverages that have
been published on the Indonesia Stock
Exchange (IDX) and data sources obtained
from the Indonesian Capital Market
Directory (ICMD) and the2015. Indonesian
Stock Exchange (IDX) for the period 2010
to2014.
Data analysis in this study was
conducted using logistic regression
because the dependent variable isaudit
opinion going concern which is qualitative
data using variables dummy. (Indarto &
Ghozali, 2016) states that logistic
regression is used to test whether the
probability of the occurrence of the
dependent variable can be predicted with
the independent variable. The logistic
regression analysis technique does not
require the normality of the data on the
independent variables. Logistic regression
analysis was carried out using the SPSS
(Statistical Package for Social Science) 22.0
for Windows program.
RESULTS AND DISCUSSION
This study used a sample ofcompanies
Food and Beverages with research
observation periods from 2010 to 2014
which issued annual financial reports with
attached auditor reports. independent.
From 22 populations, 10 samples of
companies were obtained which were then
used as data sources for analysis. The
sample in this study is as follows:
Table 1. Research Sample Data
No
Code
Company Name
1.
DLTA
PT. Delta Djakarta Tbk.
2.
FAST
PT. Fast Food Indonesia
Tbk.
3.
INDF
PT. Indofood Sukses
Makmur Tbk.
4.
MLBI
PT. Multi Bintang
Indonesia Tbk.
5.
MYOR
PT. Mayora Indah Tbk.
6.
PSDN
PT. Prashida Aneka Niaga
Tbk.
7.
PTSP
PT. Pioneerindo Gourmet
International Tbk.
8.
SMAR
PT. Sinar Mas Argo
Resources And
Technology (SMART) Tbk.
9.
TBLA
PT. Tunas Baru Lampung
Tbk.
10.
ULTJ
PT. Ultrajaya Milk Industry
and Trading Company
Tbk.
Source: Indonesia Stock Exchange that has
been processed, 2014
Descriptive Statistics
To determine the effect of audit quality
and company financial condition onaudit
opinions going concern oncompanies Food
and Beverages listed on the Indonesia
Stock Exchange for the period 2010 to
2014, statistical calculations were carried
out on the data- data that has been
obtained. The statistics used in this study
use descriptive statistics. Descriptive
statistical analysis was performed by
comparing the minimum value, maximum
value, mean and standard deviation of the
sample. Data processing using SPSS for
windows version 20.0.
120 | The Effect of Audit Quality and Financial Conditions on Going Concern Audit Opinion
(Study on Food and Beverage Manufacturing Companies Listed on The Indonesia Stock
Exchange)
Audit Quality
Table 2. Audit Quality (ADTR)
Compan
y Code
AUDIT QUALITY
20
10
20
11
20
12
20
13
20
14
DLTA
1
1
1
1
1
FAST
1
1
1
1
1
INDF
1
1
1
1
1
MLBI
1
1
1
1
1
MYOR
0
0
0
0
0
PSDN
1
1
1
1
1
PTSP
0
0
0
0
0
SMAR
0
0
0
0
0
TBLA
0
0
0
0
0
ULTJ
0
0
0
0
0
Source: processed data
Audit quality is measured using
avariable dummy where companies use the
services of a Public Accounting Firm (KAP)
large scale (Big Four) is given the number 1
and for companies that use the services of
a small scale Public Accountant (KAP) (Non
Big Four) given the number 0.
Based on table 2 above, thesector
manufacturing companies food and
beverages listed on the Indonesia Stock
Exchange (IDX) from 10 samples of
companies obtained in accordance with the
sampling criteria, it can be seen that
successively during the observation period
from 2010 to in 2014 the company food
and beverages that are listed on the
Indonesia Stock Exchange (IDX) equally use
the services of the Public Accounting firm
(KAP) large scale(bigFour)and the Public
Accounting firm (KAP) small scale (Nonbig
Four) with scale ratio of 5: 5, five companies
use the service
Large-scale Public Accounting Firm
(KAP) (Big Four), namely PT. Delta Djakarta
Tbk, PT. Fast Food Indonesia Tbk, PT.
Indofood Sukses Makmur Tbk, PT. Multi
Bintang Indonesia Tbk and PT. Prasidha
Aneka Niaga Tbk. While the five companies
using the services of the Public Accounting
Firm (KAP) small scale(Non Big Four)
namely PT. Mayora Indah Tbk, PT.
Pioneerindo Gourmet International Tbk, PT.
Sinar Mas Argo Resources And Technology
(SMART) Tbk, PT. Tunas Baru Lampung Tbk
and PT. Ultrajaya Milk Industry TBK.
Financial Condition
Table 3. Financial Condition (Z)
FINANCIAL CONDITION
(Z)
20
10
20
11
20
12
20
13
20
14
5.3
3
5.4
9
5.8
3
5.6
7
5.3
0
4.3
1
3.5
9
3.3
8
3.1
5
3.1
9
1.7
1
2.0
1
1.9
4
1.4
7
1.5
2
3.8
5
3.9
5
3.4
1
5.7
5
3.1
9
2.8
3
2.2
6
2.1
7
2.2
9
2,
15
4.1
4
4.8
5
3.7
6
3.7
3
3.2
2
3.8
7
4.0
9
3.4
4
2.9
9
2.3
4
Dwi Kartika | 121
2.6
9
3.3
9
3.1
4
1.9
5
2.3
0
1.5
2
1.7
8
1.3
6
1.0
2
1.5
3
2.5
2
2.4
4
3.2
4
3.3
5
3.8
3
Source: processed data
Based on table 3 financial condition (Z)
was measured using theprediction model
Zscore Altman. The bankruptcy prediction
model using financial ratios is more
accurate than the auditor's opinion in
classifying bankrupt or non-bankrupt
companies. The model used in this study is
as follows:
Z = 0.717Z1 + 0.874Z2 + 3.107Z3 + 0.420Z4
+ 0.998Z5
Z1 = working capital/total assets
Z2 = retained earnings/total assets
Z3 = earnings before interest and
taxes/total assets
Z4 = book value of equity/book value of
debt
Z5 = sales/total assets
Manufacturing companies in thesector
food and beverages listed on the Indonesia
Stock Exchange (IDX) out of 10 samples
used by PT. Delta Djakarta Tbk is a
company that produces fluctuating
financial conditions during the observation
period from 2010 to 2014 with a minimum
value of 5.30 and a maximum value of 5.83.
This means that the company has a
financial condition result above the value of
3, so it can be said that the company is safe
from the possibility of receiving aaudit
opinion going concern.
Audit Opinion Going Concern
Table 4. Going Concern Audit Opinion
Compa
ny
Code
Going Concern Audit
Opinion
2010
20
11
20
12
20
13
20
14
DLTA
0
1
0
0
0
FAST
0
0
1
0
0
INDF
1
1
1
1
0
MLBI
0
0
0
1
1
MYOR
0
1
1
1
0
PSDN
0
1
1
0
0
PTSP
1
1
1
0
1
SMAR
0
1
1
0
0
TBLA
1
1
1
0
0
ULTJ
1
0
1
1
0
Source: processed data
audit opinion Going concern is
avariable dummy. Companies that receive
aaudit opinion going concern are coded 1
and companies that receive aaudit opinion
non-going concern are coded 0.
Based on table 4 there are 10 samples
used in this study, it can be seen that
manufacturing companies in thesector
food and beverages are listed on the
Indonesia Stock Exchange. with an
observation period from 2010 to 2014. In
2010 there were six companies that
received audit opinions going-concern and
four other companies receivedaudit
opinions non-going-concern. Then in 2011
there were seven companies that received
aaudit opinion going concern and three
other companies received aaudit opinion
non going concern. In 2012 there were
eight companies that received audit
opinions going-concern and two other
122 | The Effect of Audit Quality and Financial Conditions on Going Concern Audit Opinion
(Study on Food and Beverage Manufacturing Companies Listed on The Indonesia Stock
Exchange)
companies received audit opinions non-
going-concern. In 2013 companies that
receivedaudit opinions going-concern
tended to decrease compared to the
previous year, namely as many as four
companies that receivedaudit opinions
going-concern and six other companies
receivedaudit opinions non-going-
concern. In 2014 the number of companies
that receivedaudit opinions going-concern
decreased again compared to previous
years, namely only two companies that
receivedaudit opinions going-concern and
eight other companies receivedaudit
opinions non-going-concern.
DISCUSSION
The Effect of Audit Quality onAudit
Opinions Going Concern
In this study, the audit quality variable
proxied by the Public Accounting Firm
(KAP) shows a negative coefficient value of
-0.282 with a significance level of 0.631
greater than 0.05 (5 percent). This means
that H1 is not successfully supported, thus
it can be concluded that audit quality has
no significant effect onaudit opinion going
concern. This indicates that the quality of a
Public Accounting Firm (KAP) reflects the
quality of the guarantee it provides, the size
of a Public Accounting Firm (KAP) does not
affect the likelihood of the Public
Accounting Firm (KAP) issuing aaudit
opinion going concern.
The results of this study are not
consistent with the results of research
conducted by (Mutchler et al., 1997) who
foundevidence univariate that large-scale
auditors are more likely to issue aaudit
opinion going concern on companies
experiencing financial difficulties compared
to small-scale auditors. However, the
results (Kartika, 2012) where the auditor's
scale variable (Big Four and Non Big Four)
has no significant effect on the possibility
of receiving aaudit opinion going concern
by the auditor.
The Effect of Financial Condition on
Audit Opinion Going Concern
In this study, the variable of the
company's financial condition as proxied
by The Altman Model/Zscore (bankruptcy
prediction model) shows a coefficient value
of -0.243 with a significance level of 0.300
greater than 0.05 (5 percent). This means
that it can be concluded that H2 was not
successfully supported, thus it can be
concluded that financial condition has no
significant effect onaudit opinion going
concern. Auditors will usually consider the
financial condition when providing aaudit
opinion going concern. This financial
condition is described by financial ratios.
These results support research
conducted by Andi Kartika, Desak Nyoman
Sri, Nurul Ardiani Emrinaldi Nur DP and Nur
Azlina which states that auditors almost
never issueopinions going concern on
companies that do not experience
(financial distress financial distress).
CONCLUSIONS
Based on the results of research that
has been carried out through various series
ranging from data collection, data
processing, data analysis, interpretation of
analysis results regarding audit quality and
Dwi Kartika | 123
financial condition toaudit opinions going
concern, the following conclusions can be
drawn, effect of audit quality on audit
opinions going concern. The results of
hypothesis testing state that audit quality
(X1) has no significant effect onaudit
opinion going concern. The quality as
measured by the size of the Public
Accounting Firm (KAP) on a large (Big Four)
and small (scaleNon-Big Four) does not
affect the quality of the audit provided by
each scale of the Public Accounting Firm
(KAP), Public Accounting Firm (KAP). large-
scale (Big Four) and small-scale (Non-Big
Four) will remain objective in
providingaudit opinions to their going-
concern clients, so that they are not
influenced by the size of the Public
Accounting Firm (KAP). Effect of financial
condition onaudit opinion going concern.
The results of hypothesis testing of
financial condition (X2) onaudit opinion
going concern stated that financial
condition had no significant effect onaudit
opinion going concern. This means that the
auditor in providing aaudit opinion going
concern does not see the financial
condition as proxied by financial ratios.
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for possible open access publication
under the terms and conditions of the Creative
Commons Attribution (CC BY SA) license
(https://creativecommons.org/licenses/by-sa/4.0/).