Irma Herliza Rizki, Mela Novita Rizki

The Impact of Tax Audits on the Quality of Financial Reporting of Corporate Taxpayers in Indonesia

Introduction

The impact of tax audits on the quality of financial reporting of corporate taxpayers in indonesia. Explore how tax audits affect financial reporting quality for Indonesian corporate taxpayers. Discover a significant positive impact, boosted by digital technology, ensuring accurate & compliant reports.

Abstract

This study aims to analyze the effect of tax audits on the quality of financial reporting of corporate taxpayers in Indonesia. Tax audits are a strategic instrument used by tax authorities to improve taxpayer compliance, especially in terms of preparing financial reports. In the digital era, tax audits have been supported by information technology that facilitates data monitoring and validation. This study uses a quantitative approach with a survey method on corporate taxpayers in various industrial sectors. Data were analyzed using a linear regression model to measure the relationship between the intensity of tax audits and the quality of financial reporting. The results of the study indicate that tax audits have a significant positive effect on the quality of financial reporting. Corporate taxpayers who frequently undergo audits tend to present more accurate financial reports and in accordance with accounting standards, due to the pressure to avoid potential sanctions. In addition, the use of digital technology in tax audits strengthens this relationship by increasing the transparency and efficiency of the audit process. However, this study also identifies challenges, such as the limited number of tax auditors and the complexity of financial reports, which can hinder the effectiveness of audits.

Review

The submitted manuscript investigates a highly relevant topic concerning the impact of tax audits on the quality of financial reporting among corporate taxpayers in Indonesia. The study clearly articulates its objective to analyze this relationship, positioning tax audits as a strategic instrument for compliance improvement, especially pertinent in an emerging economy with an evolving tax landscape. The quantitative approach, employing a survey method and linear regression analysis, appears well-suited to address the research question, providing a robust framework for empirical investigation. The core finding—that tax audits significantly and positively affect financial reporting quality—offers a valuable contribution to the literature on tax administration and corporate governance. The results indicating a significant positive effect are compelling, suggesting that the pressure to avoid sanctions directly motivates corporate taxpayers to present more accurate financial reports compliant with accounting standards. A particularly insightful aspect of this study is the acknowledgement of the digital era, where information technology supports tax audits. The finding that the use of digital technology strengthens the relationship by enhancing transparency and efficiency in the audit process adds a contemporary dimension to the traditional understanding of audit effectiveness. This highlights the evolving role of technology in improving compliance mechanisms and offers practical implications for tax authorities globally in leveraging digital tools. While the study presents clear and significant findings, it also candidly identifies crucial practical challenges that warrant further consideration. The limitations posed by the "limited number of tax auditors" and the "complexity of financial reports" are critical issues that could hinder the long-term effectiveness of audit programs, despite the positive effects observed. Future research could explore these challenges in greater depth, perhaps through qualitative methods or by examining specific policy interventions aimed at mitigating these constraints. Furthermore, investigating the differential impact of audit intensity or specific audit types across diverse industries, or the long-term sustainability of improved reporting quality post-audit, could provide valuable extensions to this foundational work.

Full Text

Comments

You need to be logged in to post a comment.