Review Journal "The Influence of Previous Audit Opinion Going Concern, audit Quality and Company’s Factor to audit Opinion Going Concern"

Title	The Influence of Previous Audit Opinion Going Concern, audit Quality and Company’s Factor to audit Opinion Going Concern
Author	Dwi Cahyono
Year	2007

Introduction

Indonesia since 1998 economic crisiss has given a huge bad financial crisiss. Selling growth indicates company’s ability to survive. A company which has positive selling growth has inclination to survive.

Theoritical Framework and Hypotesis Development

1. Going Concern Audit Opinion

Going concern is base assume in making financial report, a company can be assumed not intended or wish to melikuidasi or materially decrease scale (SAK, 2007). This has been arranged in Statement on Auditing Standards No. 59 (AICPA, 1988) declares that auditors should decide whether they sure that their client can survive or not in the future. Beside arranged in Public Accountant Professional Standart (PAPS), Auditing Interpretation Statement Standart (AISS) No. 30 of Independent Auditor’s Report about The Getting Worst of Indonesia Economy Crisiss to Company’s Continuity.

AISS considers auditors need to consider three things, namely (1) Auditor’s obligation to give advise to the clients in uttering economy effect (if necessary) to company’s ability to mantain its continuity. (2) Utterance of next event that probably appear as the effect of that economic condition, and (3) Modify audit standart form report if that economy worsting condition impact to company’s ability in holding out its continuity . Some factors that cause uncertainty of continuity (Arens, 1997), namely: (1) Continually getting big loss or unsufficient capital, (2) Company inability to pay its liabilities at due date in short period of time, (3) The losing of main customers, disaster than hasnot insuranced, and (4) Lawsuit, law reinforcement or the similar problem happened that can endanger company’s ability to run the bisnis.

2. Relation Between Audit Opinion at The Previous Year and Audit Opinion Going Concern

The previous researches such as research by Rahmadhany, Setyarno dkk, Praptitorini dan Indira ,Santosa dan Linda, Indira, Tamba, Siahaan dan Juandini, stronger an evidence that there is a positif relation between the previous year opinion and giving audit opinion going concern year of work. If at the previous year a company has accepted audit opinion going concern, so company’s possibility will be bigger to accept the same opinion at the next year of work. Based on that condition, it can be assumed into a hypothesis namely :

H1 = Audit opinion at the previous year significantly influence to probability of audit opinion going concern acceptence.

2.2 Relation Between Audit Quality and Audit

Public company in Indonesia is very selective in choosing auditor service as client from Public Accountant Office (PAO) surely will be more strive the quality from audit service that choosen. The pursuit for KAP in Indonesia is to increase audit service that given to client. The indicators can be seen from auditor’s ability to found any wrong diclosure. Based on that, can be made a prediction in hyphotesis namely :

H2 = Audit quality significantly affect to possibility of giving audit opinion going concern.

2.3 Relation Between Company’s Financial Condition and Audit Opinion Going Concern

Discriminant analysis Z Score not only used to predict bancrupt, but also used as standart from a whole company financial performace. Based on the condition, we can make a prediction in hyphotesis, namely:

H3 = Financial distress significantly influence to a gift of audit opinion going concern.

2.4 Relation Between Company’ Growth and Audit Opinion Going Concern

In this research, company’s growth proxied with selling growth ratio, it is a ration that measure how good is a company to maintain its economic position. Selling is a main activity from manufacture company means mostly of the profit that earned by company in a certain time influenced by selling that happend in that time. Based on that case, we can make a prediction in hyphotesis namely:

H4 = Company’s growth is significantly influence to give audit opinion going concern.

Relation Between Debt Default and Audit Opinion Going Concern

One of contast features with assumtion of going concern is company’s inability in filling the ability at the due date. In SAS 59 explains that default debt and debt restruction as potential indicator in the relationship with a given of going concern opinion. Based on that case, can be made as a hyphotesis namely:

H5 = Debt default significantly influence to audit opinion going concern acceptance.

3. Theoritical Framework

Based on those hypothesis development to test whether audit opinion at the previous year, audit quality, financial distress, company’s growth and debt default influence audit opinion going concern, so we make a theoritical framework below:

4. Population

This reseacrh object is a whole go publik company listed in Indonesia Stock Exchange (IDX) in manufacture line in 2007-2009.

Data Analysis Tecnique

1. Hyphotesis Test

Hyphotesis test is done using (logistic regression), because the independent variable is dicotomy variable or binner variable which has two category. In which the category 1 is audit opinion going concern (GC) and 0 category is audit opinion non going concern (NGC).

1. Judging Regression Model Properity

With significant probability shown 0.822, significant value that got higher than 0.05. So can be conclude that regression model is able to predict observation value and desearve to be usedon next research,because there is no real difference between the clasification that predicted and clasification that observed.

2. Overall Model Fit

Value in beginning -2LL (Block Number = 0) is 190,264. Meanwhile in last -2LL (Block Number = 1), after entering five new independent variabels -2LL value get decrease to be 59,671. This likelihood decreasing shows a better regression model on the other hand model that hyphotized fit with data. Means the adding of five new independent variables into researchmodel will revice this research fit model.

3. Parameter Estimation and Intepretation (Regression Coeficient)

OPINI = -2,278 + 3,362 OP + 0,824 AQ – 1,289 ZSCORE - 0,002 SGR + 1,618 DEBT

Constanta is -2,278 declare that when a value of audit opinion at the previous year, audit quality, financial condition, company’s growth and zero debt default, so logit value audit opinion going concern is -2,278

Result

The result of debt default variable test in table 3 shows coeficient regresion is 1,618 with probability level (sig) is 0,022. Since significant level of independent variable is lower than 0,05 so H0 rejected and Ha5 accepted. Therefore, can be conclude that debt default significantly influence to audit opinion going concern acceptance. This research result is also support Public Accountant Professional Standart section 341 (2001) paragraph 6 letter b about other clue of financial distress that cause disturbance of company’s going concern, namely: debt default.

Conclusion

Based on data analysis and discussion that has been done can be conclude that :

1.      Based on test result use logistic regression shows that variable audit opini previous year significantly influence to audit opinion going concern.

2.      Based on test result use logistic regression shows that variable audit quality doesn’t significantly influence to audit opinion going concern.

3.      Based on test result use logistic regression shows that variable financial condition significantly influence to audit opinion going concern.

4.      Based on test result use logistic regression found that variable company’s growth doesn’t significantly influence to audit opinion going concern.

5.      Based on test result use logistic regression shows that variable debt default significantly influence to audit opinion going concern.