CHAPTER 1

INTRODUCTION

1.1 Problem background

Globalization is now forcing companies to compete in order to stay in

business. Companies that survive are companies that have succeeded in building
excellence and have good performance. The company's performance can be seen
from the company's financial statements. In addition to measuring the performance
and health of a company, financial reports are also used to attract investors,
shareholders, creditors and even the general public so that financial statements must
be reliable and accountable.
A company's financial statements will be considered reliable and accountable
if they have been audited by a competent and independent party. The party is a public
accountant or external auditor who works under the auspices of the Public
Accounting Firm. Auditing is the process of collecting and evaluating evidence of
information to determine and report the level of conformity between the information
and established criteria (Elder, 2010). An auditor in carrying out his duties is
regulated by a professional code of ethics or better known as the Indonesian
Accountant Code of Ethics. The existence of a code of ethics aims to assess whether
an auditor is working in accordance with established standards and ethics.
The role of Audit Judgment  is very important in an audit. Based on the
Public Accountant Professional Standard (SPAP), an auditor is required to use his
professional judgment in providing an assessment of matters relating to his audit. The
more accurate the audit assessment produced by the auditor, the quality of the audit
results will increase (Lopa, 2014). When expressing an opinion on the fairness of the
financial statements, the auditor must be able to consider and decide the extent of the
accuracy of the evidence and information provided by the client (Tielman, 2012). In
making an audit judgment, an audit must be professional and independent so that the
judgment of the auditor is not influenced by other parties, because the quality of good
audit results depends on audit judgment. The quality of the audit assessment reflects
how well the auditor's performance is.
Some of Factors affecting audit judgment can be technical or nontechnical.
One of the technical factors that can affect audit judgment is the limited scope or
time of the audit, while non-technical factors such as aspects of individual auditor
behavior (Tantra, 2013). Factors used in this study and assessed to affect audit
judgment are goal orientation and ego depletion. 
 Goal orientation refers to the goals that individuals implicitly pursue when
achieving performance or achievement outcomes (VandeWalle, 1997). From a social
cognitive perspective, goal orientation is a personality trait that can positively
influence the performance of challenging tasks (Bandura, 1986). Individuals with a
high goal orientation are motivated to perform tasks to develop competence (Dweck
and Leggett, 1988). Individual goal orientations vary either high or low in learning,
performance approaches or performance avoidance.

Ego depletion is a temporary state in which early self-control processes (eg,

controlling one's environment and oneself, making choices, and initiating actions)
impair later self-control abilities (Baumeister et al. 1998). Several studies have
focused on the relationship of a person's depleted cognitive resources with ethical
decision making (Zhang et al. 2017). In the audit sector, Hurley (2019) found a
negative relationship between ego depletion and audit judgment. This is in line with
prior study which found that a person's depleted cognitive resources have a
significant effect on ethical behavior (Lian et al. 2017; Danziger et al. 2011; Hagger
et al. 2010). Yam et al. (2014) conducted an experiment to determine the
approximate conditions that allow ego depletion to positively (or) influence unethical
behavior with subjective exhaustion serving as a variable.

This research would contribute to the auditing literature by investigating the

effects of goal orientation and ego depletion on audit judgment with task complexity
as moderating variable, focusing on these two psychological constructs for several
reasons. First, while technical accounting knowledge and problem-solving ability are
important determinants of judgement task performance (Dyah and Dwi, 2019), an
auditor’s personality traits such as goal orientation and ego depletion, at the margin,
differentiate levels of audit judgement performance. Considering the effect of these
two independent variables may explain the variation of audit judgment. This study
also examined the effect of  task complexity on audit judgement performance
because it might effect the relationship between goal orientation or ego depletion on
audit judgment. Second, the research is based on social cognitive theory, which
specifies factors for determining human actions that may be useful for understanding
differences in the performance of individuals in different work settings.

The behavior of individual auditors who are judged to have an effect in

making audit judgment attracts a lot of attention from practitioners and accounting
academics. However, only a few studies in the auditing literature have considered the
effects of individual psychological constructs on audit judgement performance. The
existence of several factors that influence audit judgment attract researchers to
 conduct research entitled "The Effect of Goal Orientation and Ego Depletion on
Audit Judgment with Task Complexity as a Moderating Variable".

1.2 Problem formulation

1. How does the effect of Goal Orientation on the Audit Judgment?

2. How does the effect of Ego Depletion on the Audit Judgment?
3. How does the effect of Task Complexity moderates the impact of Goal
Orientation on the Audit Judgment ?
4. How does the effect of Task Complexity moderates the impact of Ego Depletion
on the Audit Judgment ?

1.3 Research objectives

1. To know the effect of Goal Orientation on the Audit Judgmen.

2. To know the effect of Ego Depletion on the Audit Judgment.
3. To know the effect of Task Complexity moderates the impact of Goal
Orientation on the Audit Judgment.
4. To know the effect of Task Complexity moderates the impact of Ego Depletion
on the Audit Judgment.

1.4 Research benefits

1. Theoretical Benefits 

a. Can provide knowledge and insight to the author and the readers about the
effect of goal orientation and ego depletion on audit judgment. 
b. Can reinforce previous research related to factors affecting audit judgment.
c. Can contribute to the research development in the accounting literature,
especially in the auditing literature. 
d. Can be used as a source reference for further researchers that would use the
same kind to develop research in the auditing field.

2. Practical Benefits 

a. For Researchers 

This research is expected to increase the knowledge and insight of

researchers about goal orientation, ego depletion, and task complexity.
Beside that, it can improve skills and logical thinking about problem
solving. 
b. For Students 

This research is expected to provide an explanation of audit judgment

to the student as a future auditor candidate in performing audit duties in the
working world to provide good audit judgment and can provide audit
decisions that can be accounted for. 

c. For Further Researcher 

The results of the research are expected to be used as a reference for

further research about factors that effect the making of audit judgments,
especially in this research concern to goal orientation and ego depletion , so
that it can be refined.