THE IMPACT OF EARNINGS MANIPULATION RISK AND CORPORATE GOVERNANCE RISK ON THE EXTENSION OF AUDIT PLANNING CASE STUDY: COMPANY XYZ

Abstract

This study is about to analyze the impact of earnings manipulation risk and corporate governance risk on the extension of audit planning. The researcher found that it is important to know the impact of those risks as the consideration of the management in CPA firm in term of the continuity of the audit engagement with the client. It is also important to be understood by the management of the client as the knowledge and information to improve their management and create good corporate governance that results the reliable financial statement. This research used the quantitative and qualitative method with questionnaire as its research instrument. The researcher used the multiple regression analysis as the model to analyze the variables in this research. There are two kind variables used in the research which are independent variable: earnings manipulation risk (X1) and corporate governance risk (X2); and dependent variable which is audit planning (Y). The writer used SPSS version 16.0 and Microsoft Excel 2007 to process the data. The research is conducted in Company XYZ, Jakarta. The result of this research shows that earnings manipulation risk and corporate governance risk have significant impact on the extension of audit planning in Company XYZ which is proven by the Fvalue (36.611) is greater than Ftable (2.38) with sig 0.000 less than alpha 0.1. The result of ttest could describe that partially, earnings manipulation risk and corporate governance risk have significant impact on the extension of audit planning which is proven by earnings manipulation risk value of B = 0.175 with sig 0.098 and corporate governance risk value of B = 0.770 with sig 0.000. The future research is suggested recognizing and considering other factors such as size and culture of the CPA Firm, experience, and auditor knowledge about its client. The writer also suggest to do the further research using the Big Four CPA Firm as the respondent, prepare more and choose the right time in questionnaire distributing and collecting.