ANALYSIS OF FACTORS INFLUENCING EXTERNAL AUDITORS’ RELIANCE ON USING INTERNAL AUDIT FUNCTION IN PERFORMING INDEPENDENT AUDIT IN KAP OSMAN BING SATRIO & ENY

Abstract

Internal auditing and external auditing are two different functions holding an important role in corporate governance of an organization. The cooperation of internal audit activity with external audit activity is important from both external and internal auditors’ points of view; from external audit’s points of view, it is important because it helps external auditors to raise the efficiency of financial statements audit; the relevancy from internal audit’s point of view is assured by the fact that this co-ordination assures for the internal audit a plus of essential information in the assessment of risk control (Dobroţeanu, L. & Dobroţeanu, C.L., 2002). Problem determined to be identified in this research is the influence of internal audit’s aspects over consideration of external auditors in KAP Osman Bing Satrio & Eny, on their reliance to coordinate with internal audit function. This research was conducted using both primary data (data obtained directly by researcher) and secondary data (data obtained indirectly as supplemental data). Sampling was done using purposive-judgment sampling design, where researcher obtained information from target group consisting of specific types of people who can provide the desired information due to their conformance to determined criterion, which is their audit experience entailing interaction with entities internal auditors. Analytical methodology used in this research is multiple linear regressions. From performed data analysis and calculations, it can be seen that 55.5% of the proportion of variance occurs within coordination between external and internal auditors is explained by variables consisting of internal auditors’ objectivity, internal auditors’ competence, effective communication, and quality of work performed. While the rest, which is 44.5% of the variance, is explained by other factors beyond these four factors.