The Influence of Audit Committee Structure on Financial Statements: Study on Energy Sector Companies Listed on the Indonesia Stock Exchange

Eka Putri Theresa; Imang Dapit Pamungkas

doi:10.61132/ijema.v1i1.1055

Authors

Eka Putri Theresa Universitas Dian Nuswantoro
Imang Dapit Pamungkas Universitas Dian Nuswantoro

DOI:

https://doi.org/10.61132/ijema.v1i1.1055

Keywords:

Audit Committee Structure, Committee Size, Earnings Quality, Financial Statement Quality, Independence

Abstract

The objective of this study is to directly analyze and illustrate the compositioneof the auditecommittee, which consists of financial knowledge, independence and the quantity of members on the committee, concerning the financial statement quality of energy sector industries listed on the IDX in 2023-2024.High-quality financial statements are a crucial component reflecting the outcome of the accounting process and are vital for stakeholders in decision-making. Despite regulatory requirements for audit committees, corporate financial statements in Indonesia often contain earnings management or accounting irregularities, indicating that the audit committee's very existence is insufficient to guarantee financial statements' quality. A numerical approach with a causal-comparative approach is utilized in this investigation. The secondary quantitative data are obtained from companies’ yearly financial statements, annual reports, and corporate governance disclosures published on the official IDX website. The data are examined using EViews software for panel data regression, going through many steps, including descriptive statistics, classical assumption testing, panel data model selection, and regression analysis for hypothesis testing. The audit committee's size, objectivity, and financial acumen make up the study's independent variables. Meanwhile, financial statement quality as the dependent variable is measured through earnings quality proxy using the discretionary accruals calculation approach (Jones model or Modified Jones model). Specifically, this research seeks to deliver theoretical and practical benefits for regulators in formulating corporate governance policies, give companies a comprehension of the importance of an effective audit committee, and help investors make informed investment choices.

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