Abstract

It is recently highlighted by the emphasis of regulators the importance of communications between external auditors and those charged with governance such as Audit committee or internal auditors and the implementation of the key audit matters to all listed companies. According to Auditing and Assurance Standards, external auditors are required to communicate with those charged with governance, and these Communications is one of the important audit procedures that can enhance audit quality. Therefore, as the frequency of communication was disclosed from 2014 to 2018, the purpose of this study is to verify whether frequency of auditors’ communication with those charged with governance and Audit Quality are related. Audit Quality was measured using discretionary accruals. The results show that there is a significant positive relationship between frequency of external auditors’ communication with those charged with governance and Audit Quality. In addition, significant results were not obtained as a result of introducing cross variables to verify whether the Audit Committee strengthened the relationship between frequency of external auditors’ communication with those charged with governance and Audit Quality. These results suggest that it is important to communicate external auditors with those charged with governance frequently. This study has limitations that takes into account communication frequency rather than the quality of the discussion on accounting issues, but suggest that the regulators’ policy direction is a desirable direction for enhancing audit quality, such as emphasizing communication between external auditors and those charged with governance and expanding disclosure to be activated.

Keywords

• auditors’ communication
• Audit Quality
• Audit committee

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