Red Flags, Competence, Time Budget Pressure and Audit Risk: Effect on Auditor’s Ability to Detect Fraud

Abstract

The purpose of this study is to analyze the effect of red flags, competence, time budget pressure, and audit risk on the auditor's ability to detect fraud. This study was conducted at Public Accounting Firms in Bali and West Nusa Tenggara which were published by the Indonesian Institute of Public Accountants directory 2024. The data used are quantitative data which are data in the form of numbers or numerical data. The data sources for this study are primary data which are data obtained directly from the source location and research object without going through an intermediary. The method of collecting primary data is carried out using a questionnaire method that is distributed directly to respondents. The population that is the object of this study is external auditors working at KAP in the Provinces of Bali and West Nusa Tenggara registered in the Directory of the Indonesian Institute of Public Accountants (IAPI) in 2024, totaling 115 external auditors. The data analysis technique used is the Structural Equation Model (SEM) based on Partial Least Square (PLS). The results of the study indicate that red flags have a positive and significant effect on the ability to detect fraud or in other words, the higher the auditor's red flag ability, the higher the auditor's ability to detect fraud. Competence has a positive and significant effect on the ability to detect fraud or in other words, the higher the auditor's competence, the higher the auditor's ability to detect fraud. Time budget pressure has a negative and significant effect on the ability to detect fraud or in other words, the higher the time budget pressure given by the client to the auditor, the lower the auditor's ability to detect fraud. Audit risk has a positive and significant effect on the ability to detect fraud or in other words, the higher the audit risk chosen by the auditor, the higher the auditor's ability to detect fraud.