Public Accounting Firm and Supreme Audit Agency: Comparison of Audit Efficiency

The purpose of this study is to compare the audit efficiency between the Public Accounting Firm (PAF) and the Supreme Audit Agency (SAA) in conducting audits of Local Government Financial Statements (LGFS). Tests were conducted on two sample groups. The first sample group consisted of Local Governments audited by PAF paired with other Local Governments audited by the SAA using the paired match sample method. The second sample group consisting of Local Governments audited by PAF was paired with the same local government audited by the SAA from the previous year. This study uses a quantitative approach using regression tests and different t-test of two sample groups. This study found that the audit efficiency produced by the SAA was still better than the PAF. PAF needs more time and personnel in formulating and reporting an audit finding than the SAA. SAA auditors have greater experience than PAF auditors in conducting audits of Local Government Financial Statements. PAF has limited time to understanding the entity to be audited because the engagement made with the SAA is limited to a certain period of time. PAF also has uncertainty whether the continuance of the engagement, so it is very costly for PAF to make an investment in order to increase capacity for conducting government audit.