Sustuinable Development

Sustainable development arise because of the assumption that the market economy is not always concerned about the environment. The difference between the market "perfect" and the environment as a fundamental reason why economic activities lead to environmental degradation. These differences led to the emergence of environmental economics, as a public policy intervention in the allocation of environmental resources through non-market activities or to correct market failures. The concept of sustainable development is a planning concept which emphasizes the principles of balance between economic, social, and cultural rights as the primary objective with the principles of environmental sustainability.

In the context of sustainable development, especially in the spatial dimension has received little attention. The importance of spatial elements derived from the mutual relations are (1) the global and local influence (2) global trends will affect local. Economic structure and environment in a specific region of an area to determine the sensitivity of the economic power and the external environment (Bergh and Nijkamp, 1999). Therefore, the study of sustainability in a multi-regional system could be useful in the spatial implications of global sustainability, both in regional and international activities.

The concept of sustainable development is essentially founded on three basic pillars, namely economic, social, and environmental. The third approach is not an approach that stands partially, but interact to influence each other. Sustainable development is the process of bringing these three development processes in a balanced way. At the local level, sustainable development requires that economic development can sustain people's lives through the use of resources locally. If the results of economic development (welfare) is to be distributed in the long run, the protection of the environment to prevent ecological damage is one way to go (ICLEI, 1996). Schematically, the relationship between the three basic pillars of sustainable development can be described as follows:

FIGURE 1.
BASIC PILLAR SUSTAINABLE DEVELOPMENT

In principle, the concept of sustainable development promote economic and social development and environmental protection. These three aspects should be run in a balanced and mutually supportive. Sustainable development considering that aspects of development undertaken sustain and support developments in the future. Sustainable development describes the alignment and harmony in the use of natural resources, and the resources made ​​by taking into account ongoing conservation efforts.

Sustainable development can be called if it fulfills the criteria of economic, socially beneficial, and preserve the environment. At first, the concept of sustainable development is dominated by the economic dimension. The dimensions of the environment started to receive attention in the eighties. Earth Summit in Rio de Janeiro in 1992 was the starting point in the consideration of the social dimension of sustainable development. One important result of the conference was the establishment of a commission of sustainable development (CSD - Commission on Sustainable Development). The Commission has produced an agreement to implement the concept of sustainable development as set out in Agenda 21 (Sugiyono, 2004).

The concept of sustainable development, especially economic development, is based on the available capacity of the natural resource, environmental and social character. In the past, development activities which are focused on growth and led to negative impacts of ecological deterioration and depletion of natural resources. Therefore, the management of national resources and the environment in the future should be based on an important aspect of the production and activity space for conservation and environmental health. Therefore, regional development, urban and rural, can no longer be based solely on economic development, but should be based on sustainable development (Hall and Ulrich, 2000).

Hereinafter defined sustainable development as "development that is intended to meet the needs of the present generation without compromising the opportunities of future generations to meet life" (IISD, 2005). According Askary (2003) sustainable development and environmentally sound can be defined as "a conscious and deliberate effort, which integrates the environment, including resource into the development process for assure abilities, well-being and quality of life for present and future generations to come". While the concept of sustainable development by Urban 21 (2000) is how to improve the quality of life in a region, including the quality of the ecological, cultural, political, institutional and socio-economic components without leaving a burden (depletion of natural resources and increasing debt) on the next generation.

On the other hand, Munro (1995) states that sustainable development is a set of activities that can improve the lives of people in various aspects and the increase can be maintained. Meanwhile, world commission for environment and development (WECD) defines sustainable development as development that is intended to meet the needs of present generations without compromising the ability of future generations to meet their own needs. In other words, sustainable development is defined as development that prioritize the use of resources that do not jeopardize the future use (WECD, 1987). Not only that, the sustainability here should include the three basic principles of the above, one can not only fulfilled. In its development, sustainable development is also intended to seek innovative strategies to change the institutional structure and policies and changes in the behavior of the individual to the global level (IISD, 2005).

In order for development to be sustainable it ideally benefits must be sustainable and continuously maintained. This means that development must meet a variety of objectives in a balanced way, both economic, environmental, and social (WCED, 1987; Munro, 1995; Meadows, 1999; IISD, 2005).

1. Economically Sustainable
Economically sustainable principles relating to costs and benefits, rather the benefits should outweigh the impact. Sustainable economic system must be able to produce goods and services continually, to keep management and other levels of government.

2. Socially Sustainable
Socially sustainable means reflects the interaction between development and the social norms prevailing in society. An activity is socially sustainable if it can integrate with social norms or not contrary to the public tolerance to change. Socially sustainable system must be able to achieve uniformity of distribution, the provision of social services including health and education, as well as accountability and participation.

3. Environmentally Sustainable
Ecologically sustainable, it implies to keep humans and other species that interact with it, now and in the future, so as to improve the quality of life. Environmentally sustainable system must be able to maintain stable resources, avoiding excessive exploitation of renewable resource systems, and maintain the natural resources that can not be updated so that it can be used optimally. In other words, development should not destroy the ecosystem that now exists, instead the species should be conserved for future purposes.

In development and implementation of sustainable development, the role of local government is very fundamental. As a self-regulating system, a local government consisting of a control system (government) and an object (or the community). The local government will play a role as an institution that has legitimacy and is responsible for the development and implementation of sustainable development through the policy-making process does. In an effort to generate policy-oriented cities to achieve sustainable conditions, local governments will need a set of indicators that will provide direction and guidance to local authorities about whether the policies that have been implemented are on the ideal track. Development of indicators of sustainable development is one of The set action towards more sustainable development.

Operationalization or implementation of the concept of sustainable development requires indicators to assess its effectiveness, in this case to know whether an activity, program or policy can be said to be sustainable (sustainable) or unsustainable (unsustainable). These indicators will provide advice to the government regarding the actions to be taken to overcome the problems faced. Need for indicators that are specifically developed to look at the internal management of local governments in determining whether a city has implemented a policy of sustainable development. Although global commitment to sustainable development implementation formally developed after the declaration of Johannesburg in 2002, but the efforts of indicators of sustainability have started much earlier.

Ideal criteria for the sustainable development indicators (Warren, 1997):

1. Indicators should reflect a basic or fundamental long-term economic and social environment for generations to come;
2. Easy to understand and clear: simple, understandable and accessible to the public;
3. Can be quantitatified;
4. Sensitive to changes in the location or group of people;
5. Predictive and anticipatory;
6. Have a reference or threshold value;
7. Relatively easy to use;
8. Aspects of quality: the methodology used to construct the indicators should be clearly defined with accurate, scientifically and socially acceptable, and
9. Sensitive to the Time: if applied every year to show the trend indicator representative.

Corporate Governance Corporate and Social Responsibility Disclosure

To what extent corporate governance and CSR are converging in international business not only depends on views on corporate governance, but also on how CSR is framed within an MNE. As mentioned in the introduction, CSR is an elusive concept that, just as corporate governance, has been defined in many different ways. Nevertheless, there is some agreement that it involves attention on a voluntary basis to the ethical, social and environmental implications of business (Carroll, 1999; Whetten et al., 2002). One important dimension for how CSR is framed concerns its scope: is it perceived as an external or internal issue? Deakin and Hobbs (2007) argue that CSR is often thought of by managers of listed firms as a way of dealing with external issues, for example the ethical consequences of outsourcing production activities, fair trade, and global environmental problems. However, these authors also indicate that CSR is sometimes interpreted differently as well, focusing on internal issues instead. They give the example of the European Commission, which argued in a Green Paper that besides an external dimension, CSR has an internal dimension, which involves employees’ working conditions such as work force diversity and equal pay for women (EC, 2003). The distinction between internal and external aspects of CSR touches upon one of the main debates in corporate governance: if firms have a responsibility to a wider group of constituents, how far should this responsibility go and what kind of (social and environmental) activities will they become involved in?

It was with these questions in mind that the stakeholder approach was first introduced (Freeman and Reed, 1983). This approach explains why business has responsibilities that go beyond the maximization of profits to include the interests of non-stock holding agents. Indeed, if a company would focus solely on such narrow objectives, the expectations of other stakeholders would be neglected, and in turn their support could be compromised in the long term. Freeman’s (1984, p. 46) definition of stakeholders as “any group or individual who can affect or is affected by the achievement of the organization’s objectives” is most widely accepted (Mitchell et.al., 1997).

Advocates of the stakeholder perspective consider as a starting point that “all persons or groups with legitimate interests participating in an enterprise do so to obtain benefits and that there is no prima facie priority of one set of interests and benefits over another” (Mitchell et al., 1997, p. 68). From such a perspective, a company emerges as a nexus of implicit and explicit contracts between various actors with interests that are not always congruent (Hill and Jones, 1992). The stakeholder approach emphasizes that actors have different motivations to engage in relationships with a firm and expect different benefits from their collaboration. This means that dealing with stakeholders poses complexities for business in view of conflicting interests (cf. Daily et al., 2003). Researchers in finance and governance also criticise the concept (Jensen, 2001; Sternberg, 1997), inter alia because it is “a convenient portmanteau expression into which many different items can be packed” (Charkham, 2005, p. 20). Another important argument has been that the stakeholder approach makes managers unaccountable for their actions because it does not contain clues on how to balance competing interests and thus gives managers the opportunity to pursue their own causes (Bradley et al., 1999; Jensen, 2001).

In prioritizing competing stakeholder interests, it has been argued that firms take into account to what extent the organization depends on a stakeholder for resources (Jawahar and McLaughlin, 2001). This instrumental view on CSR suggests that firms’ primary reason to be responsive to stakeholders is a maximization of long-term market value (Donaldson and Preston, 1995; Jensen, 2001). Such instrumental motives are closely connected to the way corporate governance has broadened in recent years. As discussed above, a corporate governance view suggests that the main reason for firms to deal with stakeholders is that neglecting them could mean a loss of control on the strategic direction and performance (Luo, 2005a). We therefore expect that firms driven by instrumental motives to practice CSR will predominantly be concerned with shareholders and inside stakeholders such as managers and employees, and, as a consequence, frame CSR with a focus on internal aspects. This is supported by the literature which has found that corporate governance has a considerable impact on internal CSR issues such as employee conditions (Deakin et al., 2002) and ethical aspects related to remuneration, managerial and employee behaviour (Bonn and Fisher, 2005; Kimber and Lipton 2005; Rossouw 2005; Ryan, 2005; Wieland, 2005).

In contrast, motives to deal with outside stakeholders may be seen as not as closely, or not only, connected to instrumental motives, but relying also, and perhaps more, on sustaining moral legitimacy vis-à-vis outsider groups (Suchman, 1995). When CSR is mainly a response to outside stakeholders such as local communities and NGOs, it is more likely to be perceived as dealing with external environmental and community issues (Deakin and Hobbs, 2007). On the basis of this, it can be argued that external framing of CSR shares considerably less commonalities with corporate governance. This would imply that framing CSR focusing on external issues puts much less emphasis on the competitive nature of CSR. Only in a small minority of cases implications for a firm’s strategic direction and performance may be involved – an example that is currently mentioned in this regard is climate change, but this is still in its infancy (cf. Cogan, 2006). On the whole, we thus expect that corporate governance is more likely to be integrated in MNEs’ CSR policies when CSR is framed with a strong focus on internal aspects such as employee conditions and ethical behavior of managers and employees.

Premature Sign Off Audit Procedures

In the recent case of an audit on the company, as Enron, WorldCom in USA (Duska and Brenda, 2003) Kimia Farma and closure of Public Accounting Firm in Indonesia (www.bapepamlk.depkeu.go.id) becomes an great issue for public accounting profession and formidable challenge to improve image of audit profession in providing quality audits. A good of Quality Audit in principle can be achieved if auditors apply standards and principles of auditing, behaving freely without impartial (Independent), obedient to the law and comply with professional codes of ethics. Reduction of audit quality is defined implementation of audit quality reduction is done deliberately by auditor (Coram, et al, 2004). Kane and Velury (2005), defines quality audit as capacity of external auditors to detect materiality and irregularities form. Russell (2000), mentions that quality audit is a function of quality assurance which will be used to compare actual conditions with which they should.

Reduction of Quality Audit behavior or Reduced Audit Quality is an action taken by auditors during contract in which these perform can reduce accuracy and effectiveness audit evidence collection (Malone and Robers, 1996). This behavior can occur because there is a dilemma between costs inherent in audit process and quality, faced by auditors in audit environment (Kaplan, 1995). On one hand, auditor must meet Professional Standards to achieve a high level of audit quality that can be achieved by performing audit procedures. But on the other hand, auditors face cost barriers that make to degrade quality of audits. In addition, barriers of time may be one factor leading to lower quality audit, due to limited time auditor is required to complete all audit procedures, it affects auditor's actions are intentionally not doing all the existing audit procedures.

Various studies with respect to quality of audits have been conducted among others researcher. Kelly and Margheim (1990), mentions that decline in audit quality is result of pressure. Otley and Pierce (1995), explains that some auditors dysfunctional behaviors such as Premature Sign-Off Audit Procedures are a few behaviors that tend to lead to problems behaviors as auditors, which will affect the quality loss audit and trends of lowering public confidence in accounting profession and eventually kill profession itself.

Debate Stock Exchange Commission (SEC) in discussion of Effectiveness Audit, has been established by American Institute of Certified Public Accountants (AICPA) has recommended that dysfunctional Behavior is a problem that requires sustained attention (Public Oversight Board, 2000). The survey has been conducted on senior Big Six auditor in Ireland have confirmed that 89% involved with some form of behavior lowers quality of audits in Premature Sign-Off Audit Procedures, while 12% were participating in under-reporting of Time and more other (Otley and Pierce, 1995). This condition would require attention by practitioners and institutions in implementation audit, auditor can maintain quality of her work.

Studies Cohen Commission (1978), Rhoden (1978), Alderman and Deitrick (1982), and Raghunathan (1991) detect reasons why auditors perform premature sign-off of audit procedures, auditing of limited period of time specified, perception of audit procedures performed not important (low risk), no material audit procedures, audit procedures that are less understood, audit report submission deadline, as well as influence of auditors' boredom.

Heriningsih (2002) found a significant relationship between time pressure and audit risk of premature sign-off of audit procedures. However, this study can not prove that level of materiality may be associated with premature termination of audit procedures.

Survey conducted by Conram, et.al., (2000), against 106 senior auditor general explained that budget time pressures providing greatest influence on behavior of reduced quality audit and associated with audit risk. This results explained that under conditions of low level of audit risk of error associated with an increase in audit quality reduction acts as a whole.

Otley and Pierce (1996), explaining that managers tend to perform reduced quality audit compared to increase budget time. However, different results presented by Houston (1999), that senior audit time budget less influence on risk of client in terms of audit fee pressure. Malone and Roberts (1996), found no relationship between level of time budget pressures and a decrease in audit quality.

Auditors are often confronted by presence of time pressure. Time pressure consists of time budget pressure and time deadline pressure. When time budget that has been specified could be achieved, it will not cause conflicts, so possibility of dysfunctional behaviors will not be done. Previous studies showed significant association of time pressure in explaining dysfunctional behaviors (Kelley and Margheim, 1990; Carcello et al, 1996; Otley and Pierce, 1996a; Willett and Page, 1996; Pierce and Sweeney, 2004; McNamara et al , 2005). In these studies, time pressure operationalized as attainment of time budget (time budget attainability).

The existence of time pressure causes a person is required to complete a job soon and if it is not achieved it will lead to conflict because of time allowed for an elapsed and quality of audit work may be interrupted and it will lead to dysfunctional behaviors. Previous research on time pressure associated with dysfunctional behavior has been done by Pierce and Sweeney (2004) and Kelley et al, (1999), DeZoort and Lord (1997), (Eden, 1982) and results showed there is a significant relationship.

Weningtyas et.al, (2006) found evidence of a significant relationship between time pressure, risk audits, materiality and review procedures and quality control of termination of audit procedures. The results of study Weningtyas et al proved that time pressure and audit risk associated positively with cessation of auditing procedures, so greater time pressure and audit risk faced by auditors, greater tendency of auditors to conduct audits termination procedures. While materiality and reviews procedure and quality control is negatively related to termination behavior of audit procedures, so that lower materiality and review procedures and quality control behavior of lower termination of audit procedures.

This study was motivated by Conram et.al., (2000), Heriningsih (2002) and Suryanita, et.al, (2007). Previous studies testing audit procedures that are often stopped by auditors and examine relationship between time pressure, audit risk, materiality and reviews procedure and quality control have an impact on decision to conduct an audit procedure termination. These studies there are inconsistencies between study results Herningsih (2002) and Suryanita et.al., (2006) in assessing relationship between materiality of termination of audit procedures.

Herningsih (2002) found no significant relationship between materiality of termination of audit procedures, while Suryanita et.al., (2006) could prove the relationship. This research can be assured results of previous studies on relationship between materiality of termination of audit procedures.
This study refers to termination of audit procedures above. This study involves auditor respondents who worked in Semarang. Semarang as it is one big cities in Indonesia and has quite a lot of public accounting firm so it is quite representative for this study, and to find out how much time pressure faced by auditors in Semarang effect on performance, because there a various result of time pressure that faced by auditors in different regions (Suryanita et al, 2007).

Theoritical Framework of Premature Sign-off Audit

A good of Quality Audit in principle can be achieved if auditors apply standards and principles of auditing, behaving freely without impartial (Independent), obedient to the law and comply with professional codes of ethics. Reduction of audit quality is defined implementation of audit quality reduction is done deliberately by auditor (Coram, et.al, 2004). Kane and Velury (2005), defines quality audit as capacity of external auditors to detect materiality and irregularities form. Russell (2000), mentions that quality audit is a function of quality assurance which will be used to compare actual conditions with which they should.


Attribution Theory
Attribution theory will provide an explanation of how to determine cause or motive of person's behavior. This theory was directed to develop an explanation of the ways we judge people differently, depending on the meaning of what we associate to a particular behavior. This theory refers to how one explains causes of behavior of others or himself (Luthans, 1998), which determined whether from internal or external (Robert, 1996) it will show its effect on individuals.

Cause of this behavior in social perception, better known as dispositional attributions (internal causes), and situational attributions (external causes) (Robert, 1996). Internal causes tend to refer to aspects of individual behavior, something that has existed in a person such as a personal trait, self-perception, ability and motivation. While external causes more referring to the environment that affect a person's behavior, such as social conditions, social values, public opinion as well as contextual factors audits (audit risk, Materiality and reviews procedures and quality control).

Based on above it can be concluded that attribution theory can be used as a basis for finding such factors as contextual factors audit (audit risk, Materiality and reviews procedures and quality control) cause why auditors did sign off prematurely. By knowing factors that cause an auditor to sign off prematurely, then the trigger factors of premature sign-off can be minimized, so that auditor wishes to make a premature sign-off can be reduced.

Inverted U Theory
Inverted U theory is most widely used model to explain relationship between pressure and performance. According to Robbins (2006), the logic underlying theory of an inverted U that stress at low to moderate levels stimulates body and improve ability to react. In this condition individual is usually able to do the job better, more intensive or faster. But if too much stress will place demands that can not be achieved or someone constraints, resulting in decreased performance. While stress is defined as a condition in which individuals face the opportunities, constraints (constrains), or demands (demands) associated with what is really wanted and results are perceived as something that is uncertain but important (Robbins, 2006).

Inverted U Curve: Relationship Between Stress and Performance

Model of inverted U theory also describes reaction to stress from time to time and to changes in stress intensity. Theoretical model of an inverted U got a lot of criticism from researchers such as Otley and Pierce (1996), which found no evidence of an inverted U curve relationship; Kelley and Margheim (1990), which examines relationship between time budget pressure by dysfunctional behavior auditors found no significant results statistically to support inverted U theory. Likewise, results of research conducted by Pierce and Sweeney (2004), who found a linear relationship between time budget pressure and dysfunctional behaviors. Robbins (2006), also mentioned that this model does not get much support empirically. Linear relationship is basis of this research in linking between work pressure and risk of error auditor.

Research in psychology conducted by Djatmiko (2007), mentions that relationship between stress and performance is not a linear but rather an inverted U curve, this is due to body's physiological response to stress conditions would interfere with an individual's performance. Distress at each level will cause performance degradation, so that optimal performance is achieved at individual precisely highest stress levels. In this study, relationship between pressure and quality of performance is linear, where rate of premature sign-off will occur at time budget pressures lowest and highest.

Reduced Audit Quality
As professionals, auditors are required to use his professional skills with a meticulous and thorough in carrying out audit (IAI, 2001, section 230.01). The use of professional skills with careful and thorough skepticism requires auditor to carry out their professional and must disclose in reasonable condition of company being audited based on an evaluation of evidence obtained during the course of auditing. In an effort to obtain sufficient competent audit evidence, then prior to conducting an audit of CPA is required to create and develop an audit program in writing. Audit program is a collection of audit procedures to be implemented during audit process.

The existence of reduction quality audit behavior (RQA) is also called "irregular auditing practice" (Willett and Page, 1996) in auditing literature is evidence that implementation of audit procedures in accordance with the audit program is not always implemented by auditor. RQA behavior is defined "as the actions undertaken auditor during audit assignment which reduces the effectiveness of audit evidence collected" (Malone and Robert, 1996, p. 49). Thus, evidence gathered during audit is unreliable, wrong or inadequate in quality and quantity (Herrbach, 2001). The evidence is not quite as competent and reasonable basis for auditor in detecting errors and irregularities are adrift on the audited financial statements.

RQA behavior is a serious problem, because they reduce quality of audits directly (Otley and Pierce, 1996a; McNair, 1991). As stated by McNair (1991, p. 642):

This type of behavior, namely a failure to exercise due care, can in the extreme undermine integrity of the audit process. The inability to monitor true effort is perhaps the most critical exposure, or danger, faced by an audit management held accountable for audit integrity by the public.

Studies behavior of earlier RQA mainly focused on one type of behavior that is considered most serious RQA is premature discontinuation of audit procedures (premature sign-off) [eg. Alderman and Deitrick, 1982; Margheim and Company, 1986; Raghunathan, 1991 ]. Premature termination of audit procedure is an act performed by auditor does not implement or ignore one or more of required audit procedures, but the auditor documenting all audit procedures have been completed in full (Alderman and Deitrick, 1982; Raghunathan, 1991).

Rhode results (1978) in Alderman and Deitrick (1982) showed the majority (nearly 60 percent) of respondents admitted they sometimes make premature termination of audit procedures. Results of subsequent studies conducted Alderman and Deitrick (1982) and Raghunathan (1991) confirm these findings.

Findings of subsequent studies conducted by Kelley and Margheim (1990), Malone and Robert (1996), Otley and Pierce (1996a), Herrbach (2001) and Pierce and Sweeney (2004) shows in addition to premature termination of audit procedures, various forms of other actions performed auditors in implementation of audit programs that could potentially reduce the quality of audits.