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Logistic Regression to Predict BPK's Audit Opinion

Author

Listed:
  • Elok Heniwati

    (Universitas Tanjungpura, Pontianak, Indonesia)

  • Angga Hervianto

    (Universitas Tanjungpura, Pontianak, Indonesia)

Abstract

The auditor uses the audit results of the local government financial reports to provide a professional statement in the form of an opinion and recommendations in the audit report. These opinions and recommendations are important for the local government's policy because they contain guidelines for its improvement. Purpose. This study examines the effect of audit findings (Internal Control System, non-compliance with regulations, and audit recommendation follow-up) on BPK's audit opinion using a case study of the Regional Governments in Kalimantan Zone. Methodology/approach. The logistic regression was used to determine the effect of audit findings and follow up on the BPK's opinion of audit results. This study uses secondary data (BPK Semester Examination Results Summary or IHPS) collected from 2018 to 2023. Findings. The results showed that audit findings (the internal control system and non-compliance with regulations findings) significantly negatively affected the BPK audit opinion on the financial statements in the Kalimantan region. In addition, the follow-up examination results significantly positively impact the BPK audit opinion on the financial statements in the Kalimantan region. The result was that the lower findings of the internal control system and non-compliance with regulations resulted in a better audit opinion of BPK. In addition, the higher the index follow-up on audit results, the better the acquisition of BPK audit opinion is generated. Originality/value. This study extends and contributes to the extant BPK audit opinion literature by providing new insight into how audit findings affect BPK's audit opinion in the Kalimantan zone settings. Practical implications. This finding implies that local governments must improve the implementation of internal control systems and compliance with regulations and consistently undertake BPK recommendations to increase the quality of financial reporting. The findings offer vital evidence to improve the quality of financial reporting in driving local governments' service quality. Limitations. This study only uses data from the Kalimantan region, so the generalization of the study results does not apply nationally and may cause bias in the method. To minimize bias, the next researcher can use a larger sample of data, not just one area.

Suggested Citation

  • Elok Heniwati & Angga Hervianto, 2024. "Logistic Regression to Predict BPK's Audit Opinion," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 118-127, June.
    • Handle: RePEc:iaf:journl:y:2024:i:2:p:118-127
    DOI: 10.33146/2307-9878-2024-2(104)-118-127
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    References listed on IDEAS

    as
    1. Rousseeuw, Peter J. & Christmann, Andreas, 2003. "Robustness against separation and outliers in logistic regression," Computational Statistics & Data Analysis, Elsevier, vol. 43(3), pages 315-332, July.
    2. Harun Harun & David Carter & Abu Taher Mollik & Yi An, 2020. "Understanding the forces and critical features of a new reporting and budgeting system adoption by Indonesian local government," Journal of Accounting & Organizational Change, Emerald Group Publishing Limited, vol. 16(1), pages 145-167, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    audit opinion; audit findings; BPK; Kalimantan; logistic regression;
    All these keywords.

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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