THE EFFECT OF INTERNAL AUDIT QUALITY TOWARD FINANCIAL REPORTING QUALITY

Abstract

Financial reporting quality is a global concern involving all stakeholders, including shareholders, lenders, and suppliers. The quality of financial reporting is related to the decision usefulness of financial reporting information. One thing that can be done to ensure accurate financial information for stakeholders and the public is by practicing quality audit. However, in reality, there are still many deviations occurring within companies. Therefore, researchers are interested in examining the influence of internal audit quality on the quality of financial reporting. The population of this study consists of companies in the banking, education, and manufacturing sectors in Bandung, and 51 respondents were obtained using purposive sampling technique. The type of data used is primary data collected through questionnaire distribution and interviews. The collected data is then processed using SEM-PLS with a measurement model and structural model. The results obtained from the study indicate that internal audit quality influences the quality of financial reporting. The higher the quality of internal audit of the company, the higher the quality of financial reporting it will produce.