ANALYSIS OF THE EFFECTIVENESS OF MANDATORY AUDIT ROTATION IN IMPROVING AUDITOR’S INDEPENDENCE

Abstract

Nowadays, the auditor‘s independence is decreasing. This is happening because the auditor‘s opinion is no longer formed based on audit finding but getting effectiveness of the client‘s needed. For improving auditor independence, there is Mandatory Audit Rotation from Minister of Indonesia Finance for public accounting firm and audit partner. Related to the Mandatory Audit Rotation, there is one of the questions is whether this Mandatory Audit Rotation will affect auditor independence in a positive way. The researcher focuses on the effectiveness of an auditor‘s independence. The researcher used quantitative research and primary data gathered via questionnaires in order to elaborate the subjects of this thesis. The respondent of this research is auditors of public accounting firm in Jakarta. The finding of this research has been done by applying descriptive statistic, factor analysis and regression. By using those statistical tools, this research result to analysis the effectiveness of Mandatory Audit Rotation in improving Auditor‘s Independence. The conclusion that the Mandatory Audit Rotation has significant impact on improving the independence level and auditors who works in the Big 4 and Big 10 accounting in Jakarta.