Audit opinion and earnings management:

Evidence from Greece

Maria Tsipouridou1 and Charalambos Spathis2*

Nama Dosen : Dr. Vera Diyanty S.E., M.M

Nama Mahasiswa: (1) Muhammad Arsalan Khan(1806226821)
(2) Manuel Aristo (1906421083)
Background 1
In recent years, Greece has experienced the
effects of three major financial events that
are worth investigating in the context of
financial and auditor reporting.

International
Financial Reporting the global the global
Standards (IFRS) on financial crisis financial crisis
publicly listed firms that began in that began in
beginning on January
1, 2005,
the US in 2007 the US in 2007
Background 2
debt crisis became visible in Greece in 2009.
Pre-existing conditions, Such as
• The engagement of the government in substantial foreign borrowing
and domestic overspending,
• the successive downgrading of government debt,
• the failure to implement consistent economic and structural reforms
• and the deterioration of macroeconomic indicators,
All these Condition undermined the ability of the country to prevent the
shocks associated with the crisis.
Background 3
Inevitably, financial crises have a direct effect on the business
world. For example,
• liquidity and credit problems are intensified, and the threat of
bankruptcy is even more pronounced. In turn, these threats
have an impact on a number of parties related to affected
firms.
• The economic and social costs of corporate failures are
substantial to the suppliers of capital, that is, the investors and
creditors, who may lose their investments, as well as to the
management and employees, who may lose their jobs
(Charitou, Lambertides, & Trigeorgis, 2007).
Objective

The aim of this paper is to investigate the

association between auditor reporting, as
measured by auditors’ willingness to issue
qualified opinions, and earnings management,
which is measured by discretionary accruals. .
 Related Literature 1

using a large sample of US listed firms and after controlling

for client-specific financial and market risk variables, find that
Francis and Krishnan auditors of firms with high levels of accruals in absolute
(1999), terms are more likely to issue qualified opinions for asset
realization uncertainties and for going-concern problems,
than auditors of firms with low absolute levels of accruals.

in a study examining the ability of various accruals models

to detect earnings management, find That a significant
Bartov, Gul, and Tsui
positive link exists between the absolute value of
(2001
discretionary accruals and the likelihood of receiving a
qualified opinion.
Related Literature 2

find no evidence that the frequency of qualified audit opinions

Bradshaw, is higher in firms with sizeable accruals. They conclude that
Richardson, and auditors do not alert investors to the increased incidence of
Sloan (2001) future earnings declines and GAAP violations that are often
associated with high levels of accruals on a timely basis.

He conclude that auditors are unlikely to issue qualified

opinions for earnings-management reasons. More specifically,
Butler, Leone, and
based on over 7000 qualified opinions of US firms for the period
Willenborg (2004)
1994-1999, they examine the relationship between abnormal
accruals and audit opinion type.
Related Literature 3

He investigate whether a negative association exists between

Herbohn and actual abnormal accruals and the probability of receiving a
Ragunathan (2008) qualified audit opinion in Australia.

test this relationship in a Spanish context for a sample of

Arnedo, Lizarraga, private pre-bankrupt firms. They separate the qualified
and Sanchez (2008) opinions into two groups – qualified based on going-concern
issues and qualified for other reasons
Research Question

what is the role of auditors in maintaining

financial statement users’ confidence in the
audit report

What is the the association between audit

opinion and earnings management in a situation
where the propensity to manage earnings may
be high
Research Design

Researcher used qualitative research

Design methodology

The initial sample consists of firms listed on the

ASE (Athens Stock Exchange ) from period
begins in 2005 and ends in 2011. which cover
Data three notable events of international importance
- the mandatory adoption of the IFRS, the global
financial crisis that began in 2007, and the
European sovereign debt crisis that followed.
HASIL

• Hasil memberikan bukti bahwa keputusan kualifikasi going-

concern tidak terkait dengan tingkat akrual diskresioner,
baik dalam sampel penuh dan dalam tertekan (Butler et al.,
2004; Herbohn & Ragunathan , 2008).
• Penurunan ekonomi telah mempengaruhi kesehatan
keuangan perusahaan dengan memengaruhi jenis opini audit
yang diterima.
• Auditor sepertinya tidak mempertimbangkan karakteristik
keuangan klien dalam keputusan pelaporan mereka.
SIMPULAN

• Dalam pemeriksaan apakah akrual diskresioner meningkatkan

kemungkinan perusahaan menerima opini audit yang memenuhi
syarat, kami menggunakan sampel perusahaan yang terdaftar di
ASE untuk periode pasca-IFRS dari 2005 hingga 2011, periode
yang meliputi krisis keuangan global dan Yunani. masalah utang
negara.
• Butler et al. (2004), temuan mengungkapkan beberapa contoh
keberangkatan GAAP atau batasan ruang lingkup dan memberikan
sedikit dukungan untuk kehadiran manajemen laba yang ekstrim.
• Peneliti membagi pendapat yang memenuhi syarat ke dalam dua
kategori berikut: memenuhi syarat karena ketidakpastian
kelangsungan usaha dan memenuhi syarat untuk alasan lain.
KETERBATASAN

Proxy untuk pelaporan auditor dan manajemen

laba ini tidak sempurna karena mereka dibentuk
menggunakan informasi yang tersedia untuk
umum, daripada informasi pribadi yang diketahui
oleh dua pihak utama dalam hubungan auditor-
klien - auditor dan manajer.
 SARAN

Penelitian empiris di masa depan dapat mengeksplorasi

tingkat biaya audit dan non-audit dan bagaimana biaya
ini dipengaruhi oleh krisis utang.
TERIMAKASIH