HASTUTI, THERESIA DWI and Indarto, St. Lily DECISION OF ACCEPTANCE OR REJECTION OF ASSIGNMENT AUDITING: A TEST OF THE EFFECTS OF CLIENT'S BUSINESS RISK, RISK AUDIT, RISK BUSINESS AUDITOR AND ADAPTATION TO RISK. South East Asia Journal of Contemporary Business, Economics and Law, 5 (1). ISSN 2289-1560

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Abstract

This study developed and tested a model that describes how auditors evaluate the relevant risks and how auditors adapt to these risks when they decided to accept their clients. Client acceptance model developed by the auditor is intended for auditors to evaluate the risk associated with business clients, including the financial condition of the internal control structure of the client and the client's prospects and business continuity. This evaluation is then used to determine the risks that would be faced by the auditor if the auditor will accept the audit assignment for a client company or reject consideration of profitability or letigasi possibility in the future. Participants or respondents in this study are the Under Graduate final semester accounting students who enrolled in the Accounting Department of Soegijapranata Catholic University in Semarang. There were 345 students. The method of data analysis used in this study is SEM (Structural Equation Modeling), which will be used to estimate the relationship between the observed indicators and the latent variables. The study gives the results that the client's business risk and audit risk considerations are associated with audit risk. While consideration of the client's business risk has nothing to do with the auditor's consideration of business risks, the consideration of audit risk is significantly and negatively associated with the decision of acceptance or rejection of the assignment of auditing the financial statements of the client. But, the client's business risk considerations are associated positively and significantly with the decision of acceptance or rejection of the assignment of auditing a client's financial statements. The study was also obtained from the results that the auditor's consideration of business risk cannot mediate the relationship between audit risk considerations with consideration of acceptance or rejection of the assignment of auditing financial statements. In addition, the auditor's consideration of business risk cannot mediate the association between the receipt of the client's business risk auditing the financial statements of the assignment and consideration of audit risk associated positively and significantly with adaptation strategies to proactive risk. In another word, client business risk considerations have nothing to do with adapting to risks proactively. Auditor's consideration of business risks is not associated with adaptation strategies to proactive risk. The adaptation strategies to proactive risk cannot mediate the association between the receipt of the client's business risk auditing and the financial statements of the assignment. Adaptation strategies to proactive risk may mediate the relationship between audit risk by the decision of acceptance or rejection of the assignment of auditing financial statements, as well as adaptation strategies to proactive risk may mediate the relationship between business risk auditors with auditing the financial statements of acceptance of assignment.

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