The relationship between accounting firm quality control rating by the SEC and audit quality as measured by abnormal accrual.

Abstract

This research studies the relationship between the voluntary disclosure of the Security and Exchange Commission reports of the audit quality control system and audit quality. In addition, this study explores the relationship between the 6 quality aspects of accounting firm and audit quality. The audit quality is measured by abnormal accruals by Yoon model. The samples used in the model are 528 listed companies with fiscal year end in 2022. The tool in the research is multiple regressions. The results do not show a statistically significant relationship between the voluntary disclosure of the Security and Exchange Commission reports of the audit quality control system and audit quality. The results may indicate that accounting firms have similar quality. For the quality aspects of accounting firm based on TSQC1, the score of the 5th component, which is the operational aspect, has a negative relationship with the absolute value of abnormal accruals. Financial statements audited by accounting firms with high score on operational components ( lower operational quality) , Instead, have lower abnormal accruals than the financial statements audited by accounting firms that received scores that reflected better operational quality. This could be interpreted as accounting firms with operational problems exercising rigorous conservatism.