The Effect of Audit Tenure, Firm Size, Level of Audit Fees, Independence, and Competence on Audit Quality at the North Sumatra Provincial BPKP

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FORMOSA NEWS - Medan - Auditor Competence Drives Public Financial Oversight Quality in North Sumatra BPKP. Auditor competence is the primary determining factor in maintaining the quality of public financial oversight at the North Sumatra Provincial Financial and Development Supervisory Agency (BPKP), according to a study published in 2026 by researchers from Universitas Prima Indonesia. The research team led by Bunga Ristama Sagala alongside Rospinuryani Sinaga and Margaretha Br Sitinjak examined how key internal audit factors influence state financial supervision. Their empirical findings demonstrate that an auditor’s technical knowledge, specialized skills, and professional experience significantly improve the precision of audit results, outperforming factors such as audit tenure duration, target entity size, or audit fee levels.

Financial Accountability and Regional Oversight Challenges
The Financial and Development Supervisory Agency (BPKP) serves a vital role as the government's internal supervisory body, tasked with ensuring public financial accountability and guiding national development projects. In North Sumatra Province, this supervisory function is especially crucial due to the high volume and structural complexity of large-scale public infrastructure initiatives. Maintaining audit quality across regional administrations presents ongoing challenges. Recent increases in budget non-compliance findings in North Sumatra local governments highlight the necessity of systematic evaluations regarding internal audit operations. Identifying which factors directly improve audit quality enables supervisory bodies to prevent financial irregularities and strengthen early-detection systems.

Simplified Research Methodology
The study conducted by the Universitas Prima Indonesia researchers employed a quantitative empirical approach using a direct survey design. Data was collected by distributing structured questionnaires to 73 professional auditors working at the North Sumatra Provincial BPKP office. The researchers processed the survey responses through several statistical testing stages:

• Validity and Reliability Testing: Confirmed that all survey questions accurately and consistently measured the intended variables.
  
• Classical Assumption Testing: Verified data normality, multi-collinearity, and heteroscedasticity to ensure statistical model accuracy.
  
• Hypothesis Testing: Applied multiple linear regression analysis—including partial t-tests, simultaneous F-tests, and coefficient of determination ($R^2$) calculations—to measure how independent variables influence audit quality.
  

Key Research Findings
The statistical analysis revealed clear patterns regarding what influences audit quality within the North Sumatra Provincial BPKP:

• Auditor Competence has a Significant Positive Impact: The competence variable achieved a calculated t-statistic of 2.717 (exceeding the critical table threshold of 1.99601) with a p-value of 0.008. This confirms a strong direct relationship between auditor knowledge and audit quality.
  
• Simultaneous Influence of Internal Audit Factors: Taken together, audit tenure, entity size, audit fee levels, independence, and competence significantly affect audit quality, as indicated by an overall significance value of $p < 0.001$.
  
• Explanatory Power of the Model: The study's Adjusted $R^2$ value reached 0.229, showing that the five evaluated variables account for 22.9% of the total variance in audit quality at the agency.
  
• Factors Without Direct Partial Impact: Individually, audit tenure ($p = 0.067$), entity size ($p = 0.563$), audit fee levels ($p = 0.272$), and auditor independence ($p = 0.764$) did not display statistically significant partial effects on audit quality in this specific context.
  

Real-World Impact and Institutional Policy Implications
These research findings offer valuable guidance for policymakers, public sector managers, and state oversight institutions. By demonstrating that competence is the single most effective partial driver of audit quality, the study highlights that effective financial supervision relies more on human capital expertise than on procedural constraints or budgetary allocations. For public institutions and oversight agencies, prioritizing continuous professional training, specialized audit certifications, and hands-on field experience offers the most reliable pathway to mitigate fraud risks and enhance institutional governance. Strengthening auditor capacity directly supports the operational success of the Government Internal Control System (SPIP), fostering transparent and clean governance.

Author Profiles
Bunga Ristama Sagala, S.Ak. Researcher in Public Sector Accounting and Financial Governance at Universitas Prima Indonesia.
Rospinuryani Sinaga, S.E., M.Si. Lecturer and Researcher at Universitas Prima Indonesia specializing in Auditing, Public Sector Accounting, and Internal Control Systems.
Margaretha Br Sitinjak, S.E., M.Si. Academic and Researcher at Universitas Prima Indonesia focusing on Managerial Accounting, State Financial Auditing, and Governance.

Sources
Bunga Ristama Sagala, Rospinuryani Sinaga, and Margaretha Br Sitinjak. The Effect of Audit Tenure, Firm Size, Level of Audit Fees, Independence, and Competence on Audit Quality at the North Sumatra Provincial BPKP. Asian Journal of Management Analytics (AJMA), Vol. 5, No. 3, 2026, Pages 493–510
DOI: https://doi.org/10.55927/ajma.v5i3.16583
URL:https://journal.formosapublisher.org/index.php/ajma