Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Effect of Auditor Quality, Good

Corporate Governance and Organization
Culture on Auditor Performance
Indrayati, Sumiadji, Hari Purnomo
Accounting Program, Politeknik Negeri Malang, Indonesia

Abstract:- This study aimed to investigate the effects of experience ofEnron were enough to demonstratethat fraud
audit quality, good corporate governance and is mostly committed by insiders. The disclosure of these
organization culture on auditor performance in Public scandals caused a decline in public trust, especially in the
Accounting Firms in Indonesia. Data were collected financial community, towards the reputation of the auditors.
from 100 auditor in public accounting firms in East However, external auditors need to be responsible for the
Java through a questionaire survey. Structural spread of cases of accounting manipulation.
Equation Modelling is conducted to examine the
relationships. The finding indicate that audit quality, In terms of auditing, the auditors must build trust with
good corporate governance positively influence on the service user, for example, through independence to
auditor performance. The results also indicate a positive provide services, professional skills, supervision, assessing
relationship between organization culture and auditor the internal control system, collecting highly competent
performance. To increase the generalisability of this audit evidence, applying the applicable accounting
study, future research needs to collect data from a principles consistently, full disclosure, and expressing an
different set of population or country. This will help to opinion on the fairness of financial statements (SPAP,
expand on the database of the public accounting firm 2001: 150.1).
businesses.
Several cases of violations committed by auditors
Keywords:- Auditor Quality, Good Corporate Governance, were influenced by the personal characteristics of the
Organization Culture, Auditor Performance. accountants, audit experience, the independence of public
accountants, the application of ethics, the quality of the
I. INTRODUCTION auditor, and the violation of SPAP. Examples include the
cases of Muzatek, KAI, BRI for bad credit, KPMG
Auditor performance is the result of the action or the Sidharta, Malinda Dee City Bank, KAP Anderson, Bank
implementation of audit tasks that have been completed by Lippo, Worldcom, and the violation of ethics ina medical
the auditor in a certain period, starting from planning the device corruption case.
audit, conducting tests, and auditing. Auditor performance
is defined as a public accountant who objectively examines Veena and Neely (2016) proved that there is an
the financial statements of a company or other influence of auditor and audit processes on the audit
organizations to determine whether the financial statements quality. Besides, (Abidin, 2018) revealed that audit quality
fairly present the accounting principles. In all material and corporate governance have an influence on auditor
respects, financial position and business results of a performance. Arifin et al. (2013) said that organizational
company follow the predetermined work standards, namely culture has no influence on auditor performance. A
the Public Accountant Professional Standards. The auditor violation of audit quality might be caused by the lack of
performance can be measured by the results of the audit competency in the accounting field. For that reason, this
that has been carried and shows the rupiah generated in a study raises the title of the empirical study of audit quality,
certain period. High audit quality is expected to produce good governance, and organizational culture on auditor
high performance or results too. performance.

Nowadays, there are many legal cases involving II. LITERATURE REVIEW
accounting manipulation. These accounting manipulation
scandals carried out by internal and external accountants  A Conceptual Framework and Hypotheses Development
have involved a number of large companies in America, The objective of this research was to examine the
such as Enron, Tyco, Global Crossing, and Worldcom, and influence of audit quality and good corporate governance
several large companies in Indonesia, such as Kimia Farma, on auditor performance mediated by organizational culture
and Lippo Bank, which were previously known to have a in the context of a public accounting firm. The research
high audit quality subjects were partner/manager/supervisor working in a
public accounting firm in Indonesia stipulated in a concept
The emergence of these cases (which involved the so that the concept is defined as a paradigm explaining the
CEO, the audit commission, the audit committee, internal relationship between variables. Auditor quality consists of
and external auditors, and public accountants) and the several standards; a professional competence and

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Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
proficiency, independence, expertise and technical training, Auditor performance is measured by education,
the well-planned work and supervised assistants, an expertise, and mission in the workplace (Casio, 2006).
understanding of the internal control system, an evidence of Organizational performance is the organizational skills to
competency in audits, and audit stating that the client’s aim for efficiency and effectiveness by using resources
financial statements have been prepared under the financial (Daft, 2000). Organizational performance can be measured
accounting standards applied consistently with the previous by non-financial and financial aspects such as customer
year, full disclosure, and expressing an opinion on the links, quality, quantity, and timeliness (Kaplan and Norton,
fairness of financial statements. Neely (2017) examined the 2001). Therefore, there is a relationship between audit
auditor quality by proposing 28 audit’s quality indicator quality, auditor performance, and organizational culture.
consisting of 3 dimensions; audit professionals, audit
processes, and audit results. Neely’s research found that the Denison (1984) examined 34 companies in America
identification of audit quality aimed to support the goals of for 5 years, while Kotter and Heskett (1992) investigated
public accounting firms in improving auditor performance the relationship between good governance and
and the reputation of the public accounting firm itself. organizational performance for 200 companies through a
strong culture. Lim (1995) stated that there was a
Ibrahim, Fatima, Htay (2006) examined the effect of relationship between culture and performance. Practitioners
governance and performance of a comparative study and academics suggest that organizational performance
between Sharia and Non-Sharia approach on the Malaysian depends on the degree of overall cultural value (Denison
Stock Exchange with 50 companies. The results showed 1990). There is an element of fairness from the public
that governance has a significant influence on auditor accounting firm in giving opinions regarding the fairness
performance. Trisnaningsih (2005) observed the effect of of the client’s financial statements, the auditor must be
good corporate governance on auditor performance on 150 independent and uphold justice towards the client’s
public accounting firms in East Java. The results showed interests, users of financial statements, and the interests of
that good corporate governance had no significant effect on the public accountant itself. A public accountant must
auditor performance. transparently show all matters related to the field audit or
payroll system and give opinions on the fairness of
Salin (2008) investigated the relationship between financial statements and other management. Accountability
good corporate governance and auditor performance on the and responsibility require the auditor to record and report to
Malaysian stock exchange with the results that corporate clients by making an independent auditor’s report to be
governance had a significant effect on auditor performance. given to the client and then forwarded to the users of
Since the crisis in Hong Kong, Singapore, Malaysia audited financial reports such as investors, creditors,
Sawicki 2009, and Mitton 2002, Manan et al. (2013) have governments, communities, academics and suppliers, and
improved corporate governance, such as transparency, customers. Auditor culture becomes a positive force in
fairness, and accountability of financial data to improve achieving effective organizational achievements containing
auditor quality and auditor performance. values, norms, beliefs, ideology, expectations shared by
members of the organization to shape individual/group
Khan (2017) and Hofstede (2011) analyzed the behavior, strength, avoiding uncertainty, oriented to short-
relationship between organizational culture and term and long-term goals.
organizational performance through attitudes, norms,
values, strong coordination and integration rules, Mahoney et al 1963 stated that organizational
organizational structure climate, control systems, performance includes planning, investigation, staff
experience, innovation, bureaucracy, and communication. selection, coordination, direction, negotiation,
Quality checks consist of several aspects or points of representation, control, and evaluation. This will affect
auditing standards; the expertise and adequate technical auditor performance in carrying out the assignment so that
training, an independent mental attitude, auditing there is a positive relationship between good corporate
professionally, well-planned audit and supervised assistant governance and auditor performance through the auditor
staff, an understanding of the company’s internal control, culture.
sufficient competent evidence to audit (inspections,
observations, confirmations, and information requests from Based on the description above, we can discuss the
clients) to provide fairness opinions on the client’s financial conceptual research that describes the relationship of
statements, auditor must state that the client’s financial influence among variables, as explained in Figure 1.
statements have been prepared under the financial
accounting standards, all information that supports the  Hypotheses Development is as Follows
financial statements has been explained or adequately H1: Audit quality has a positive influence on
disclosed, and the opinion which states that the financial organizational culture
statements have been presented fairly following the H2: Good corporate governance has a positive influence on
accounting standards finance. Due to the organizational organizational culture
culture states that good values, beliefs, and norms are H3: Audit quality has a positive influence on auditor
jointly owned by members of the public accounting office performance
organization, so that good performance and a good H4: Good corporate governance has a positive influence on
reputation will be achieved. auditor performance

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Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology
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H5: Organizational culture has a positive influence on include compilation services (recording services forthe
auditor performance. preparation of financial statements), tax services (income
tax return filing services, tax planning) and consulting
 Auditor Performance services (reviews and comments on client business plans,
Auditor performance results from auditors completing professional advice, etc.).
their tasks over a certain period of time. It involves audit
planning, tests administration, auditing, and reporting. Mulyadi (2002) argued that the auditor is qualified if
his/her performance is according to the auditing
According to Mulyadi (1998: 11), auditor standards.Auditing standards govern the auditor’s
performance was the performance of the public accountant requirements, fieldwork, and the preparation of audit
in examining the financial statements of a company or other reports.
organization. In carrying out the audit tasks, the auditor
needs to determine whether the financial statements, the Auditing standards (Soekrisno, 2014) consist of ten
financial position, and the business results of a company standards and all applicable Statements of Auditing
are in accordance with the Public Accountant Professional Standards (PSAs). The ten auditing standards are divided
Standards (PAPS). The auditor performance can be into 3 groups: (1) general standards, (2) fieldwork
measured by the audit results that show rupiah in a certain standards, and (3) reporting standards. General standards
period of time. High audit quality is expected to produce govern the auditor’s requirements, fieldwork standards
high performance or results.Kalbers and Forgarty (1995) regulate the quality of auditing, and reporting standards
suggested that auditor performance is an evaluation of work provide guidance for auditors in communicating audit
carried out by superiors, coworkers, auditors themselves, results to the client.
and direct subordinates. Work performance is achieved by
an employee when he/she carries out tasks assigned to Carcello, Hermanson and McGrath (1992) tried to
him/her based on skills, experience, and time sincerity, and summarize audit standards in thirteenattributes: (1)
it is measured by considering the quantity, quality, and experienced, (2) understanding the client’s industry, (3)
timeliness. responsive to the client’s needs, (4) having technical
competence in applying audit standards, (5) independence,
 Auditor Quality (6) being cautious, (7) having a strong commitment to
DeAngelo (1981) stated that audit quality is the quality, (8) involving colleagues/managers in audit
probability of the auditor finding errors in the client’s assignments, (9) carrying out audit reports properly, (10)
financial statements and reporting them to the user of the interacting with the client’s audit committees, (11) having
financial statements. Auditor quality is a very difficult high ethical standards and knowledge of accounting and
factor to measure directly, so some researchers use certain auditing, (12) being skeptical in audit assignments, and (13)
measures as an instrument, for example, the size of a public peer reviewing by colleagues or third parties.
accounting firm.
Behn, Carcello, and Hermanson (1997) found that the
DeFond (1992), and Reed, Trombley, and Dhaliwal following audit attributes had a significant and positive
(2002) in Maharani (2012) stated that the large public effect on audit client satisfaction: experience of conducting
accounting firms generally have a higher independence audits, understanding the industry, being responsive to
level, better industry expertise, and ownership to find and client needs, adherence to audit standards, the involvement
report irregularities and misstatements in the company’s of PAF partners/managers, and relationships with audit
financial report. committees.

Auditor quality is defined as the quality of the auditor In addition, Deis and Giroux (1992) also conducted a
performance inproviding a service to his/her clients. study of matters related to audit quality: (1) the duration of
Auditor performance will be qualified if the auditor obeys the auditor’s audit of a company (tenure); the longer the
the professional standards of public accountants, adheres to auditor audits the same client, the higher the quality will be,
the Indonesian accountant’s code of ethics, and conducts (2) the number of clients; the bigger the number of clients,
peer review. Based on professional standards of public the better the quality, (3) the financial health of the client;
accounting, the services provided by the auditor are the healthier the client’s financial condition, the bigger the
assurance, attestation, and non-assurance services. The chance of them following the standards, and (4) a review by
assurance service is an independent professional service of a third party; audit quality will increase if the auditor
public accounting firms consisting of attestation services to knows that the work will be reviewed by a third party.
improve the quality of information for consideration
bydecision makers. Attestation services by the public According to Neely (2016), there are 28 indicators of
accounting profession involve audit services, inspection auditor quality divided into threegroups: (1) professional
services for prospective financial reports, analytical reviews auditor, (2) audit process, and (3) audit results. Professional
and procedures, mutually agreed procedures, special audit auditor includes staffing leverage, partner workload,
services, or special checks to find fraud. Non-assurance manager and staff workload, technical accounting, auditing
services excludeopinion giving services on the fairness of resources, people with specialist skills and knowledge,
financial statements. Examples of non-assurance services experience and personnel audit, industry expertise

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Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
personnel audits, personnel audit turnover, the number of Independence : public accountants must be
audit cases, training hours per personnel audit, audit hours independent, impartial, and not easily
and area risk, and allocation of audit hours for the audit influenced by others in carrying out
phase. Audit process includes the results of independent their profession.
surveys of company personnel, rating and compensation
quality, audit fees, business, client risk, compliance with In our study, we used accountability and responsibility
independent needs, investment in supporting the quality of to measure good corporate governance.
auditing infrastructure, the results of company internal
audit quality reviews, and the inspection of results and  Organizational Culture
compensation testing techniques. Audit results include the Gibson et al. (1996: 42) defined organizational culture
frequency and impact of the restatement of financial as a system of values, beliefs, and unique norms shared by
statements for errors, fraud and other misconduct members of an organization. Organizational culture can
infinancial statements, measuring the quality of financial havepositive and negative effects on effective
statements, reporting internal controls, the time of going organizational performance.
concern reporting, the results of independent surveys of
committee members, and private litigation proceedings. In Kotter and Heskett (1992) stated that organizational
our study, we used the auditor’s competence and culture is a value shared by members of the organization
independence to measure audit quality. that tends to shape group behavior. Organizational
culturalvalues tend to be invisible and so difficult to
 Good Corporate Governance change. Visible norms of group behavior are illustrated in
Good governance can create a better decision-making the behavior patterns, and organizational styles can change.
process, improve the operational efficiency of the company, Hellriegel et al. (1989: 302) defined organizational culture
and further improve services to its stakeholders. Kapler and as a combination or integration of philosophy, ideology,
Love (2002) found a relationship between corporate values, beliefs, assumptions, expectations, attitudes, and
governanceand company performance measured using norms. Hofstede (1994: 4) stated that organizational culture
Return on Assets (ROA). Another important findingis that is a pattern of thought, feeling, and action of a social group
the implementation of good governance at higher levels has which distinguishes it from other social groups. Siagian
been more useful in developing countries compared with (2002: 200) proposed that organizational culture is one of
developed countries. This shows that a company which the important variables for a leader because organizational
applies good governance will get greater benefits, culture reflects values and becomes a guideline for
especially for those companies in a country with low law members of the organization.
enforcement. Machfoedz (2006) found that audit
committees had a significant positive effect on earnings Hofstede (2010) investigated the effect of
quality, and earnings quality had a significant effect on organizational culture on organizational performance
company performance. Trisnaningsih (2007) stated that withsix outcome indicators and showed that organizational
good governance did not significantly influence auditor culture had a significant and positive effect on
performance. organizational performance. The six organizational culture
dimensions were power distance,
The basic principles of the concept of good individualism/collectivism, uncertainty avoidance,
governance in PAFs include: masculinity/femininity, long-term/short-term orientation,
indulgence/restraint. In our study, we used the survival of
Fairness : public accountants, in giving opinions the company and the togetherness of the staff to measure
regarding the fairness of the financial theorganizational culture variable.
statements, must be independent and
uphold justice inthe interests of III. RESEARCH METHOD
clients, the users of financial
statements, and the interests of the  Sample Selection and Data Collection Procedure
public accountant him/herself. The sample retrieved for this study is 100 auditor from
Transparency : public accountants should strive to 24 public acoounting firms in East Java Indonesia. They
always be transparent with financial include HJA public accounting firm, Doli BSDA public
statement information obtained from accounting firm, Supriyadi public accounting firm, Nasikin
their clients. public accounting firm, MTD public accounting firm,
Accountability : public accountants must explain their Toufan SR public accoubnting firm, Achsin public
roles and responsibilities in auditing accounting firm, Benny public accounting firm, Sendi
and be disciplined in completing their Cahyadi public accounting firm, Drs. Arief HP public
auditing and reporting. accounting firm, Buntaran & Lisawati public accounting
Responsibility : public accountants must adhere to the firm, Maroeto public accounting firm, Thomas public
generally accepted accounting accounting firm, Basri public accounting firm, Setijawati
principles and professional standards public accounting firm. In this study data are collected by
of public accountants. using a mail survey questionaire. The informants for this
study are partner, manager, supervisor, senoir accountant

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and yunior accountant for the public accounting firms. Of  Structural Model
the 125 questionares mailed out, 100 were received, The results of hypothesis testing are shown in Table 4.
indicating response rate of 80 per cent. It can be seen that all five hypotheses (H1–H5) were
significant.
 Measures
All the constructs are measured using a 5-point Likert Table 5 shows the direct and indirect effect of Auditor
scale (1= strongly disagree, 2= disagree, 3= quite agree, 4= Quality and Good Corporate Governance towards Auditor
agree, 5 =strongly agree). Measurements of these constructs Performance mediated by Organizational Culture.
are adapted from existing literature. Table 1 presents the
measurements of all the variables in this study. Table 5 shows that the estimation value of direct
effect of Auditor Quality and Good Corporate Governance
Data source of this study used primary data and towards Auditor Performance reaches 0.29 and 0.35,
collected by documentation from 24 PAFs in East Java. respectively. Furthermore, the effect value of Auditor
Data processing methods and analysis used structural Quality and Good Corporate Governance towards Auditor
equation modeling (SEM).We conducted validity and Performance mediated by Organizational Culture is 0.84
reliability tests, a classic assumption test, and an Structural and 0.81, respectively, thus summing up the direct effect up
Equation Modelling test. to 1.13 for Auditor Quality and 1.16 for Good Corporate
Governance. As the total effect value is higher than the
IV. ANALYSIS AND DISCUSSION OF FINDINGS direct effect value, thus Organizational Culture serves as
the intervening variable.
Table 2 shows the results for the validity and
reliability tests. It can be seen that all loading factor values V. DISCUSSION
were ≥ 0.50 (valid), and all values of AVE were ≥ 0.50
(valid). It was concluded that the validity of all manifest  The Influence of Auditor Quality on Organizational
variables on the latent variable were good. The results of Culture
reliability calculations showed that all values of construct Auditor Quality had a significant and positive
reliability (CR) were ≥ 0.70 (reliable), so all latent variables influence on Organizational Culture (0.451), a CR value of
had good reliability. 2.775, and a p-value of 0.006. Because the CR value was in
the range -1.96 to 1.96 and the p-value was <0.05, H₁was
The SEM test ensures that the data is free from accepted. This means that the Quality of Audit had a
multicollinearity, outliers, and has a normal distribution. significant effect on Organizational Culture. This finding
The model used in the SEM test is shown in Figure 2. supports the research of Yuskar, Devisia, and Selly (2011),
which found that the application of auditor quality, based
The SEM equations found were: on audit standards, can create a better organizational culture
for public accounting firms in Indonesia.
Organizational Culture (Y1) = 0.45 Auditor Quality (X1) +
0.42GCG (X2)+ Z1  The Influence of Good Corporate Governance on
Auditor Performance (Y2) = 0.29 Auditor Quality (X1) + Organizational Culture
0.35GCG (X2) + 0.39 Corporate Governance had a significant and positive
Organizational Culture (Y1)+ Z2 where GCG is Good influence on Organizational Culture (0.42), a CR value of
Corporate Governance and Z1 is and Z2 is 2.483, and a p-value of 0.013. Because the CR value was in
the range 1.96 to 1.96 and the p-value was < 0.05, H₂was
The structural equations above show the relationship accepted. This meant that Good Corporate Governance had
between exogenous latent constructs and endogenous latent a significant effect on Organizational Culture. This finding
constructs. It can be seen that Auditor Performance (Y2) supports the study by Yuskar, Devisia, and Selly (2011),
was most influenced by Organizational Culture (Y1), while which proposed that Good Corporate Governance can
Organizational Culture (Y1) was more influenced by improve organizational culture.
Auditor Quality (X1). The best indicator for Audit Quality
(X1) was X1.2 (Independence) with the highest loading  The Influence of Auditor Quality on Auditor
factor of 0.919. This means that if a decision maker wants Performance
to increase the Audit Quality (X1), the improvement of Audit Quality had a significant and positive influence
indicator X1.2 (Independence) should be prioritized. on Auditor Performance (0.291), a CR value of 2.116, and
a p-value of 0.034. Because the CR value was in the range -
Table 3 shows that the Chi-square/CMIN, RMSEA, 1.96 to 1.96 and the p-value was < 0.05, H₃ was accepted.
GFI, TLI, and CFI values were a good fit. This meant that the Audit Quality had a significant effect
on Audit Performance. This study supports the research
conducted by Trisnaningsih (2007) and Yuskar, Devisia,
and Selly (2011), which stated that audit quality can
improve auditor performance.

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Volume 4, Issue 12, December – 2019 International Journal of Innovative Science and Research Technology
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 The Influence of Good Corporate Governance on Auditor quality had a significant effect on auditor
Auditor Quality performance. To improve the auditor’s performance, the
Good Corporate Governance had a positive influence auditor should increase the quality of their service by
on Auditor Performance (0.347), a CR value of 2.412, and making sure that the auditing process is in accordance with
a p-value of 0.016. Because the CR value was in the range - the international financial reporting standards (IFRS), that
1.96 to 1.96 and the p-value was < 0.05, H₄ was accepted. financial reports are the results of accounting information
This meant that Good Corporate Governance had a systems, and that the auditors have complied with the
significant effect on Auditor Performance. This study applicable auditing standards adopted from the
supports the study by Trisnaningsih (2007) and Yuskar, International Standard Auditing (ISA).
Devisia, and Selly (2011), which stated that the application
of good corporate governance increases auditor Good corporate governance had a significant effect on
performance. auditor performance. Auditors should make sure that the
auditing process has implemented the elements of good
 The Influence of Organizational Culture on Auditor corporate governance: reasonableness in conducting audits,
Performance fairness, accountability, responsibility, and independence.
Organizational Culture had a positive influence on
Auditor Performance (0.389), a CR value of 2.237, and a p- Organizational culture also had a significant effect on
value of 0.025. Because the CR value was in the range - audit performance, which shows that cooperation and
1.96 to 1.96 and the p-value was < 0.05, H₅ was accepted. future-oriented would improve the auditor performance.
This meant that the Organizational Culture had a significant
effect on Auditor Performance. This study supports the The results of this study indicated that auditor quality,
study by Trisnaningsih (2007) and Yuskar, Devisia, and good corporate governance, and organizational culture can
Selly (2011), which stated that good organizational culture all improve auditor performance. In particular, this suggests
can improve auditor performance. that leaders of public accounting firms should focus on
increasing employee motivation by improving employee
VI. CONTRIBUTION AND IMPLICATION welfare and work facilities to increase the performance of
their auditors.
This study is attempted to investigate the antecedent
that may influence the success of implementation of audit This research suggests that further studies should
quality, good corporate governance and organization improve the models used in this study by adding variables
culture on auditor performance in public accounting firms such as code ethics and adding larger samples to gain
in East java Indonesia. With based on literature, this study further insight and understanding.
has provided evidence to show that audit quality, good
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LIST OF TABLES

Variables and Items Sources

Audit Quality (AQ) Neely (2016)
1. Competency
2. Independency

Good Corporate Governance (GCG) Sheila Nu Nu (2016)

1. Accountability (AC)
2. Responsibility (Resp)

Organization Culture (OC) Hofstede (2010)

1. Cooperative (Co)
2. Sustainability (Sus)

Auditor Performance (AP) Abdul Hamid (2016)

1. Quality (Qual)
2. Quantity (Quan)

Table 1:- Measurement of All Variables

Convergent Validity Discriminant Validity

Construct Reliability
(CR > 0.7)
Rank

Manifest (LF > 0.5=Valid) (AVE > 0.5=Valid)

Latent Variable
Variable
Loading
Description AVE Conclusion CR Description
Factors

X1.1 0.709 Valid 2

Audit Quality
0.735 Valid 0.802 Reliable
(X1)
X1.2 0.919 Valid 1

X2.1 0.748 Valid 2

GCG (X2) 0.671 Valid 0.766 Reliable
X2.2 0.827 Valid 1

Y1.1 0.823 Valid 1

Organizational
0.621 Valid 0.736 Reliable
Culture (Y1)
Y1.2 0.700 Valid 2

Y2.1 0.891 Valid 1

Auditor
0.834 Valid 0.868 Reliable
performance (Y2)
Y2.2 0.860 Valid 2
Table 2:- Validity and Reliability Tests – Outer Model

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Goodness of Fit
Cut-off Value Result Description
Index
Chi-Square / Good fit
21.47 Good fit Model
CMIN Poor fit
> 0.050Good fit
P-value CMIN 0.090 Good Fit Model
< 0.050Poor fit
< 2.000Good Fit
CMIN/DF < 3.000 Marginal Fit 1.534 Good Fit Model
> 3.000 Poor Fit
< 0.080 Good fit
RMSEA < 0.100 Marginal Fit 0.073 Good Fit Model
> 0.100 Poor fit
GFI > 0.900 Good fit 0.951 Good Fit Model
AGFI > 0.800 Marginal fit 0.873 Marginal fit Model
TLI < 0.800 Poor fit 0.965 Good Fit Model
CFI 0.982 Good Fit Model
Table 3:- Compatibility Evaluation of the Structural Model

Variable Hypothesis Testing

H Path Coefficient Conclusion
Exogenous --> Endogenous CR p-value
Auditor Quality Organizational Culture
--> H₁ 0.451 2.775 0.006 Significant
(X1) (Y1)

Organizational Culture
GCG (X2) --> H₂ 0.42 2.483 0.013 Significant
(Y1)
Auditor Quality
--> Auditor Quality (Y2) H₃ 0.291 2.116 0.034 Significant
(X1)
Auditor Performance
GCG (X2) --> H₄ 0.347 2.412 0.016 Significant
(Y2)
Organizational Auditor Performance
--> H₅ 0.389 2.237 0.025 Significant
Culture (Y1) (Y2)
Table 4:- Estimation and Hypothesis Testing

Exogenous Direction Endogenous Direction Endogenous Direct Indirect Total Add. Info.
Variable Variable Variable Effect Effect Effect

Auditor Auditor 0.29 - - -

Quality Performance

GCG Auditor 0.35 - - -

Performance

Auditor Organizational Auditor - 0.84 1.13 intervening

Quality Performance Performance

GCG Organizational Auditor - 0.81 1.16 intervening

Performance Performance

Table 5:- Effect of Auditor Quality and Good Corporate Governance towards Auditor Performance mediated by Organizational
Culture

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ISSN No:-2456-2165
LIST OF FIGURES

Fig 1:- Conceptual Framework Model

Fig 2:- Path Diagram of the Structural Equation Model (SEM)

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