Reduced auditor independence and the rise of corporate accounting
manipulations have caused trust of the users in audited financial
statements to begin to decline, so users of financial statements are
questioning whether public accountants are independent parties. This
research issue is related to the Decree of the Minister of Finance No.
17 in 2008 about public accountant services. Giving attestation
services, in the form of financial statements about an entity, are
conducted by the audit firm for no longer than 6 consecutive fiscal
years and by a public accountant for 3 consecutive fiscal years at the
longest. The purpose of this research is to examine empirically the
influence of auditor tenure on audit quality. Auditor tenure is measured
as the length of the auditor-client relationship. Audit quality is
measured by the propensity of auditors to issue a going-concern opinion.
This study uses a sample of firms listed on the Indonesia Stock
Exchange during the 2003-2008 period. Research analysis uses logit model
to measure the effect of auditor tenure on the auditors’ propensity to
publish a going-concern opinion. The hypothesis which states that the
length of auditor tenure influences negatively the propensity of
auditors to issue a going-concern opinion is statistically supported.
This research is expected to provide empirical evidence about the
importance of limiting of the auditor-client relationship.