Reliability Model of Financial Reporting: Moderation and Mediation Effects

Abdul Halim, Ahmad Dahlan, Gendut Budiwahyono


Public companies’ financial report must be published formally as a means of management accountability to shareholders for the resources they manage. The reliability of financial report is important for stakeholders as a basis for economic decision making. Therefore, this study aims to build reliability the model of financial report. First model put competence and independence as independent variables and second model put professional supervision and professional commitment as a moderator, and third model put audit quality as mediator. The population is 398 public accountants who work for public accounting firms throughout East Java. The samples of 187 public accountants are selected by purposive sampling technique. Data were collected with a questionnaire and analyzed using partial least square. The conclusions can be stated as follows.  The financial report reliability model was built from: first, competence and independence as independent variables affected audit quality; second, professional supervision and professional commitment were able to moderate (strengthen) the relationship of competence and independence with audit quality; third, audit quality was able to mediate (increase) the effect of competence and independence on financial report reliability.

Keywords: professional supervision, professional commitment, audit quality, financial report reliability

DOI: 10.7176/RJFA/11-24-06

Publication date: December 31st 2020


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