Impact of implementation of ISA 600 on audit market share in Indonesia

Fitriany Fitriany, Viska Anggraita, Aria Farah Mita, Fitria Indriani

Research output: Contribution to journalArticlepeer-review


IAPI (Institute of Public Accountants in Indonesia) published SA600 on Audits of Group Financial Reports (Including Auditor Work Component) which have been effective since 2013. This standard is following ISA (International Standards on Auditing) No 600. With ISA600, group auditors are fully responsible for all parent and child financial reports, even though the child's financial statements are not audited by the group auditor. The impact of this full responsibility can cause group auditors to choose to carry out audits of component companies directly. This can lead to the possibility of a component auditor shift to the group auditor in order to minimise the risks that must be borne by the group auditor, because when involving other auditors as component auditors, the group auditor faces risks if the audit quality of other auditors is a low-quality component auditor. This study aims to examine the impact of the application of ISA600 on the share of the audit market in Indonesia. The research samples are companies that make consolidated financial statements. The companies that make the consolidation report are looked up by the names of their subsidiaries, then the names of Audit Firms and audit partners are searched based on data from P2PK of the finance ministry. The research period is from 2011 to 2016. The sample was obtained for 1,205 subsidiaries each year. To prove the hypothesis, a different test of market share was conducted in these 3 groups, before and after the application of ISA 600. The results showed that the market share of Big 4 rose 4.85%, Second Tier also increased by 1.74% while the small market share fell 6.56%. These findings are in accordance with complaints from many small Audit Firms that experienced a decrease in the number of clients due to the application of ISA 600. Therefore, the government needs to think about actions that need to be taken to protect small Audit Firms.

Original languageEnglish
Pages (from-to)135-150
Number of pages16
JournalInternational Journal of Innovation, Creativity and Change
Issue number4
Publication statusPublished - 1 Jan 2020


  • Audit market share
  • Component auditor
  • Group auditor
  • ISA600


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