Premature Sign Off Audit Procedures

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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).