Determinants of Audit Quality: Evidence from Consumer Sectors in Indonesia

Audit quality refers to the auditor's ability to detect and disclose irregularities, fraud, or violations in a company's financial statements through the resulting audit report. A high-quality audit is crucial for ensuring the reliability of financial information and strengthening investor and stakeholder confidence in the company's performance. This study examines the determinants of audit quality among companies listed in the cyclical and non-cyclical consumer sectors in Indonesia during the 2021–2023 period. The factors analyzed include corporate governance, audit fees, client importance, workload, and auditor industry specialization. The purposive sampling method was employed, resulting in a sample of 106 companies and 318 observational data points. The data were analyzed using panel data regression with a panel-corrected standard errors (PCSE) approach to address heteroscedasticity and autocorrelation issues. The results showed that client importance and auditor industry specialization are positive determinants of audit quality, while workload negatively affects audit quality. These findings have important implications for public accounting firms, regulators, and other stakeholders, encouraging enhanced audit reliability so that financial statements can be trusted and used as a basis for informed decision-making.