Internal audit, audit committee and independent auditor and its effect on internal control disclosure

• Main Authors: Majidah, Majidah, Hamfri, Djajadikerta, Amelia, Setiawan
• Format: Conference or Workshop Item
• Language: English
• Published: 2016
• Subjects: HF5601 Accounting
• Online Access: http://repo.uum.edu.my/20814/1/ICAS%202016%20343-350.pdf; http://repo.uum.edu.my/20814/; http://icas.my/index.php/proceedings/211-internal-audit-audit-committee-and-independent-auditor-and-its-effect-on-internal-control-disclosure

Annual reports are the most comprehensive documents available for public and become one of primary source for researchers.Currently, there is no international standard for annual report content and presentation.Every country has their own regulations on annual reports.One of the components must be disclosed in the annual report according to Bapepam (Indonesian Capital Market Oversight Board) is an internal control section. This study aims to examine whether there are differences in the disclosure of internal control in companies included and excluded in the superior category.In addition, this study aims to identify the influence of the internal audit function, the audit committee and the independent auditor on the disclosure of internal control. Internal audit is a function of the control structure of entities, while in corporate governance, the audit committee is responsible for assisting the board of directors to ensure that the financial statements and internal control structure are presented adequately.This research was conducted using content analysis of the company’s annual report. In this research, samples were grouped into two categories: included and excluded in the superior category.In the superior category, there were 30 public companies whose shares were included in IDX30 (IDX30 is a new index in Indonesian Stock Exchange for investors who trade large-cap shares with high liquidity and consists of 30 stocks from blue-chip companies). Then, with matched sampling method, 30 companies were taken as an equivalent comparison. Moreover, the results of the content analysis were processed furthermore through path analysis. The result reveals that there were differences in the two categories.The IDX30 group disclosed more satisfied internal control disclosure than the non-IDX30 group.The results of path analysis found that the internal audit function and the audit committee positively affect the disclosure of internal control.