Theoritical Framework of Premature Sign-off Audit

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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).


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.