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The Influence of Internal Audit Activities and Business Complexity on the Amount of Fees for External Auditors (Case Study of Manufacturing Companies on the IDX)

Author

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  • Arum Ardianingsih

    (Universitas Pekalongan, Indonesia)

  • Hidayatul Affifah

    (Universitas Pekalongan, Indonesia)

Abstract

An audit is a supervision activity and evaluation of the effectiveness of internal control and the reasonableness of the financial statements. The purpose of the audit is to add the value to the company's operations and improve the reliability of financial reporting. Internal audit activities provide company business risk information to external auditors so as to reduce the scope of the audit and have an impact on the amount of fees for external auditors. Companies that are increasingly complex businesses owned also make the completion of the audit longer, as a result the amount of the fees for auditor services rises. This study wants to examine the effect of internal audit activity and business complexity on the amount of fees for external auditor services. The analysis technique uses classical assumption test, multiple linear regression and hypothesis testing. This study found that internal audit activity did not have a effect on the amount of auditor fees. While the complexity of the business has a positive effect on the amount of auditor fees.

Suggested Citation

  • Arum Ardianingsih & Hidayatul Affifah, 2021. "The Influence of Internal Audit Activities and Business Complexity on the Amount of Fees for External Auditors (Case Study of Manufacturing Companies on the IDX)," Finance, Accounting and Business Analysis, University of National and World Economy, Institute for Economics and Politics, vol. 3(2), pages 176-179, December.
  • Handle: RePEc:aan:journl:v:3:y:2021:i:2:p:176-179
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