The effect of audit results and financial performance on corruption level moderated by government size

Abstract

Purpose: This paper aims to examine the effect of audit results and financial performance on corruption level taking into consideration the effect of government size as a moderating variable.. Design/Methodology/Approach: The population of the study is the Indonesian provincial government for the period 2012-2015. The sampling technique used is purposive sampling with 123 unit analysis. The data analysis technique used is the absolute difference method test, F test, and coefficient determination (R2) test. Findings: The study shows that audit results that are consistent with audit findings, post-audit follow up actions, and independence ratio have a positive effect on corruption level. Meanwhile, financial performance doesn’t have a significant effect on corruption level. Practical Implications: This study has practical implications on factors affecting corruption level. The provincial government should strengthen its supervision and improve its internal control effectiveness to reduce corruption. Originality/Value: This paper was original in terms of government size as the moderating variable in the proposed model.