Determinants of Audit Quality and the Moderating Role of the Audit Committee (Empirical Study of Consumer Goods Manufacturing Companies Listed on the IDX, 2022–2024)

Abstract

Background: Reliable external auditing supports credible financial reporting by reducing informational imbalances between companies and their stakeholders. Audit outcomes may vary with the time needed to complete the engagement, the auditor's expertise, the opinion issued in the previous year, and the strength of internal governance. These issues are particularly relevant for consumer goods manufacturers, whose operational complexity increases the need for dependable external assurance. Objective: This study assesses the relationships of audit report lag, auditor industry specialization, and prior-year audit opinion with audit quality and evaluates whether audit committee effectiveness moderates those relationships. Methods: Using purposive sampling, the analysis covers 117 firm-year observations from consumer goods manufacturing companies listed on the Indonesia Stock Exchange during 2022–2024. Audit quality is represented by a binary indicator of Big 4 auditor engagement. The hypotheses were tested with binary logistic regression and Moderated Regression Analysis (MRA). Results: A longer audit report lag is significantly associated with a lower probability of Big 4 engagement (p < 0.001). Auditor industry specialization and prior-year audit opinion do not reach statistical significance at the 5% level, and none of the three interaction terms involving audit committee effectiveness is significant. Conclusion: Of the determinants examined, audit timeliness is the only factor significantly related to the Big 4 audit-firm proxy in this sample. The proposed moderating role of audit committee effectiveness is not supported by the empirical results.