Audit Quality in Government Audit: Public Accountant Firm vs. Government Auditors in Indonesia

This study aims to investigate the difference in audit quality between the Public Accounting Firms (PAF) in Indonesia and the Audit Board of the Republic of Indonesia (BPK). We conducted a test using two sample groups of local governments from 2016 until 2018. The first group consists of local governments audited by PAF compared to the other local governments audited by BPK using paired match sample criteria. The second group consists of local governments audited by PAF compared to the same local governments audited by BPK in the previous year. We apply quantitative research using a regression test and t-test of two sample groups. The result shows that the use of PAF auditors did not affect the number of audit findings compared with BPK auditors. The additional analysis shows that there is no significant difference in the number of findings between PAF auditors and BPK auditors between 2017 through 2018. The result implies that the BPK should continue to use PAF auditors in the government financial audit process.