Companies should prioritize personal relationships and previous cooperation experiences when selecting an auditor

Oct 13, 2025 by wbrum.org 18 views

Analysis of the Factors that Influence the Change of Public Accounting Firm in Food and Beverage Companies on the Indonesia Stock Exchange

Introduction

In the business world, accountability and transparency are two very important elements. For this reason, companies must involve third parties, in this case the auditor, to audit their financial statements. However, it is not uncommon for companies to change public accounting firm or switching auditors. This article will discuss the analysis of factors that influence the change of auditor in food and beverage companies listed on the Indonesia Stock Exchange (IDX) for the 2009 to 2011.

The Importance of Auditor Switching in Food and Beverage Companies

Auditor switching is a common phenomenon in the business world, and it can have significant implications for companies. When a company changes its auditor, it can be a sign of a change in management, a shift in strategy, or a response to financial difficulties. In the food and beverage industry, auditor switching can be particularly significant, as it can impact the company's reputation, financial performance, and relationships with stakeholders.

Research Background

This study aims to analyze the effect of changes in Return on Assets (ROA), auditor size, and auditor opinion on auditor changes in the food and beverage sector. Using the Purposive Sampling method, this research collects samples from 15 companies listed on the IDX, with a total of 45 units of analysis. The data used is taken from financial statements, independent audit reports, and annual reports that can be accessed through the official IDX website, www.idx.co.id.

Research Methodology

In this study, the analysis techniques used include descriptive statistical analysis and inferential analysis with logistics regression methods. Through this analysis, researchers want to identify whether there is a significant relationship between the factors studied with company decisions to change auditors.

The Role of Return on Assets (ROA) in Auditor Switching

Return on Assets (ROA) is a key performance indicator that measures a company's profitability. It is often used by investors, analysts, and stakeholders to evaluate a company's financial performance. In the context of auditor switching, ROA can play a significant role in influencing a company's decision to change auditors. When a company experiences a decline in ROA, it may be a sign of financial difficulties, which can lead to a change in auditor.

The Impact of Auditor Size on Auditor Switching

Auditor size is another factor that can influence a company's decision to change auditors. Large auditors often have more resources, expertise, and reputation, which can be attractive to companies. However, the size of the auditor may not be a major consideration for companies in the food and beverage industry, as they may prioritize personal relationships and previous cooperation experiences.

The Influence of Auditor Opinion on Auditor Switching

Auditor opinion is a critical factor in the audit process, as it provides an independent assessment of a company's financial statements. In the context of auditor switching, auditor opinion can play a significant role in influencing a company's decision to change auditors. When an auditor expresses a qualified or adverse opinion, it can be a sign of financial difficulties or poor financial performance, which can lead to a change in auditor.

Results and Discussion

The results showed that changes in the percentage of ROA, auditor size, and auditor's opinion did not have a significant influence on the decision of the auditor's change in food and beverage companies listed on the IDX. This finding is quite interesting, because it is often assumed that the company will replace the auditor if there is poor financial performance or if the auditor's opinion does not support. However, these results indicate that there are other factors that are more dominant in influencing the decision.

Additional Analysis

The identification of the three factors studied can be caused by several things. First, the food and beverage industry in Indonesia is one of the sectors that is quite stable and developing. This causes companies in this sector to be more confident with the auditors they choose, regardless of financial performance that may fluctuate. Second, the size of the auditor, which is often interpreted as a reputation and experience, may not be a major consideration for these companies. Finally, the auditor's opinion may not be considered a determining factor, because many companies are more considering personal relationships and previous cooperation experiences.

Conclusion

Overall, this study provides new insights on the factors that influence the change of auditors in the food and beverage sector. It is important to continue to explore other aspects that might affect, such as the company's internal factors or broader market conditions. Thus, stakeholders can better understand the dynamics that occur in the Switching auditor's decision, and the company can carry out a more appropriate strategy in managing relationships with their auditors.

Recommendations

Based on the findings of this study, the following recommendations can be made:

Companies should prioritize personal relationships and previous cooperation experiences when selecting an auditor. This is particularly important in the food and beverage industry, where companies may prioritize stability and continuity over other factors.
Companies should consider the size of the auditor as a secondary factor. While auditor size may not be a major consideration for companies in the food and beverage industry, it can still play a role in influencing a company's decision to change auditors.
Companies should not rely solely on auditor opinion when making decisions about auditor switching. While auditor opinion is an important factor in the audit process, it should not be the sole determining factor in a company's decision to change auditors.

Limitations of the Study

This study has several limitations that should be noted. First, the sample size is relatively small, which may limit the generalizability of the findings. Second, the study only examines the food and beverage industry in Indonesia, which may not be representative of other industries or countries. Finally, the study only examines the factors that influence auditor switching, and does not examine other aspects that may affect a company's decision to change auditors.

Future Research Directions

This study provides several avenues for future research. First, researchers can examine other factors that may influence auditor switching, such as company size, industry, and market conditions. Second, researchers can examine the impact of auditor switching on a company's financial performance and reputation. Finally, researchers can examine the role of auditor switching in other industries and countries.
Q&A: Analysis of the Factors that Influence the Change of Public Accounting Firm in Food and Beverage Companies on the Indonesia Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of changes in Return on Assets (ROA), auditor size, and auditor opinion on auditor changes in the food and beverage sector.

Q: What is the significance of this study?

A: This study is significant because it provides new insights on the factors that influence the change of auditors in the food and beverage sector. It also highlights the importance of considering personal relationships and previous cooperation experiences when selecting an auditor.

Q: What are the limitations of this study?

A: The limitations of this study include a relatively small sample size, which may limit the generalizability of the findings. Additionally, the study only examines the food and beverage industry in Indonesia, which may not be representative of other industries or countries.

Q: What are the implications of this study for companies in the food and beverage industry?

A: The implications of this study for companies in the food and beverage industry are that they should prioritize personal relationships and previous cooperation experiences when selecting an auditor. They should also consider the size of the auditor as a secondary factor, and not rely solely on auditor opinion when making decisions about auditor switching.

Q: What are the implications of this study for auditors?

A: The implications of this study for auditors are that they should focus on building strong relationships with their clients and providing high-quality services. They should also be aware of the importance of auditor size and auditor opinion in influencing a company's decision to change auditors.

Q: What are the implications of this study for regulators?

A: The implications of this study for regulators are that they should consider the importance of auditor size and auditor opinion in regulating the audit profession. They should also ensure that auditors are held accountable for their actions and that they provide high-quality services to their clients.

Q: What are the implications of this study for investors and stakeholders?

A: The implications of this study for investors and stakeholders are that they should be aware of the importance of auditor size and auditor opinion in influencing a company's decision to change auditors. They should also consider the potential risks and benefits of auditor switching and make informed decisions accordingly.

Q: What are the future research directions for this study?

A: The future research directions for this study include examining other factors that may influence auditor switching, such as company size, industry, and market conditions. Additionally, researchers can examine the impact of auditor switching on a company's financial performance and reputation, and the role of auditor switching in other industries and countries.

Q: What are the practical implications of this study for companies in the food and beverage industry?

A: The practical implications of this study for companies in the food and beverage industry are that they should:

Prioritize personal relationships and previous cooperation experiences when selecting an auditor
Consider the size of the auditor as a secondary factor
Not rely solely on auditor opinion when making decisions about auditor switching
Focus on building strong relationships with their auditors
Ensure that their auditors provide high-quality services

Q: What are the practical implications of this study for auditors?

A: The practical implications of this study for auditors are that they should:

Focus on building strong relationships with their clients
Provide high-quality services to their clients
Be aware of the importance of auditor size and auditor opinion in influencing a company's decision to change auditors
Ensure that they are held accountable for their actions

Q: What are the practical implications of this study for regulators?

A: The practical implications of this study for regulators are that they should:

Consider the importance of auditor size and auditor opinion in regulating the audit profession
Ensure that auditors are held accountable for their actions
Ensure that auditors provide high-quality services to their clients

Q: What are the practical implications of this study for investors and stakeholders?

A: The practical implications of this study for investors and stakeholders are that they should:

Be aware of the importance of auditor size and auditor opinion in influencing a company's decision to change auditors
Consider the potential risks and benefits of auditor switching
Make informed decisions accordingly