THE IMPACT OF THE GRABBING HAND ON DETERMINANTS OF AUDIT QUALITY: EVIDENCE FROM GOVERNMENT EXTERNAL AUDITORS, INDONESIA

Abstract

This research investigates the influence of the Grabbing Hand Theory on audit quality within the Indonesian government sector, with particular emphasis on how political pressure may affect audit effectiveness. The Grabbing Hand Theory posits that government officials may enact policies primarily for personal gain, which often undermines transparency and accountability. The study aims to elucidate how political pressure interacts with key variables such as professional prudence, independence, motivation, and auditor integrity in shaping perceptions of audit quality. Data gathered through a survey distributed to 548 auditors at the Indonesian Financial Audit Agency (SAI), achieving a high response rate of 96%. The data analysis conducted using moderated regression analysis (MRA) within the framework of Partial Least Squares Structural Equation Modelling (PLS-SEM). The primary findings indicate that professional due care, independence, motivation, and integrity significantly enhance perceived audit quality. However, political pressure does not moderate the relationship between professional due care and audit quality. Conversely, it diminishes the positive effects of both independence and motivation on audit quality. The implications of these findings suggest that governmental policies should focus on bolstering auditor independence and mitigating political pressure. Recommended best practices include the formulation of stricter anti-corruption policies, the establishment of more transparent reporting systems, and the provision of increased training for auditors had better manage external pressures. These measures anticipated to reinforce auditor integrity and motivation, thereby improving overall audit quality.