Audit Quality, Audit Competence, And Audit Evidence as Determinants of Financial Transparency: Evidence from Indonesian Islamic Banks.
Keywords:
Keywords: Financial transparency, audit quality, audit competence, audit evidence, Islamic banking, Stewardship Theory.
Abstract
This study aims to analyze the influence of audit quality, audit competence, and audit evidence on financial transparency in Islamic banking institutions in Indonesia. This study uses a quantitative approach with panel data regression analysis based on data from 14 Islamic banks in Indonesia during the period 2017–2024, with a total of 112 firm-year observations. The data were analyzed using the Fixed Effect Model (FEM) with the Driscoll–Kraay error standard to produce robust estimates. The results showed that audit quality and audit evidence had a positive and significant effect on financial transparency, while audit competence had a positive but insignificant effect. Control variables, namely profitability (ROA) and company size, also have a positive and significant effect on financial transparency. Based on Stewardship Theory, auditors and management act as stewards who are responsible for encouraging transparency and accountability to protect the interests of stakeholders. These findings confirm the importance of a strong audit mechanism in improving financial transparency and governance in Islamic banking institutions in Indonesia.
References
References
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Ainun, S., & Islam Negeri Sultan Syarif Kasim Riau, U. (2024). Audit Quality: The Impact of Auditor Competence, Independence, and Professionalism with Evidence Competence as Mediator Nasrullah Djamil (Vol. 2, Number 3).
Aspiranti, T., Ali, Q., Sudrajad, O. Y., & Rusgianto, S. (2023). Shariah governance reporting of Islamic banks: An insight from Malaysia. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2247220
Ayu, S. A., Maisya Pratiwi, & Aryuna, W. (2024). The Effectiveness of Sharia Audit in Islamic Financial Institution. EKONOMIKA SYARIAH : Journal of Economic Studies, 8(2), 219–230. https://doi.org/10.30983/es.v8i2.8977
Bechihi, O., & Nafti, O. (2025). Corporate governance and sharia board: enhancing disclosure compliance in Islamic banks of MENA region. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2024-0865
Blessing, O. C., Amarachi, W. D., & David, C. O. (2025). Audit Evidence and Small and Medium Enterprises (SMEs) Failure. Journal of Business and Econometrics Studies, 1–5. https://doi.org/10.61440/JBES.2025.v2.89
Cen, S. H., & Alur, R. (2024, October 29). From Transparency to Accountability and Back: A Discussion of Access and Evidence in AI Auditing. Proceedings of the 4th ACM Conference on Equity and Access in Algorithms, Mechanisms, and Optimization, EAAMO 2024. https://doi.org/10.1145/3689904.3694711
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Chrisna Putri, R., Perwita Sari, R., & Azmiyanti, R. (2024). Ekombis Review-Jurnal Ilmiah Ekonomi dan Bisnis The Influence Of Audit Fee And Competency On Audit Quality Moderated By Professionalism At KAPs In Indonesia. Ekombis Review: Jurnal Ilmiah Ekonomi Dan Bisnis, 12(4), 4069–4080. https://doi.org/10.37676/ekombis.v12i4
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Fadila, E. F., Ramadhyani, Y. A., Saputri, Y. I., & Manurung, H. (2023). The Influence of Audit Fee, Audit Tenure, and Auditor Competency on Audit Quality: A Systematic Review. In Jurnal Ilmiah Manajemen Kesatuan (Vol. 11, Number 3).
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Kokina, J., Blanchette, S., Davenport, T. H., & Pachamanova, D. (2025). Challenges and opportunities for artificial intelligence in auditing: Evidence from the field. International Journal of Accounting Information Systems, 56. https://doi.org/10.1016/j.accinf.2025.100734
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Maria Ulfa, A., & Ermian Challen, A. (2020). Good Corporate Governance on Integrity of Financial Statements.
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Mulyadi, R., Eka Jaya Ramdhani, H., & Suheny, E. (2022). The Effect of Corporate Governance, Audit Quality, and Auditor Industry Specialization on the Integrity of Financial Statements. Journal of Applied Business, Taxation and Economics Research, 1(3), 231–242. https://doi.org/10.54408/jabter.v1i3.43
Nadiya Amany, A., Fakhruddin, I., Cinintya Pratama, B., & Hapsari, I. (2024). THE EFFECT OF AUDIT QUALITY, AUDIT COMMITTEE, AND ISLAMIC CORPORATE GOVERNANCE ON ISLAMIC CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE IN ISLAMIC BANKING ON PERIOD 2018-2022. International Journal of Social Science, Management and Economics Research, 2(4), 36–54. https://doi.org/10.61421/ijssmer.2024.2403
Nugrahanti, T. P., Sudarmanto, E., Andani, M., & Judijanto, L. (2023). The Effect of Audit Quality, Auditor Independence, and Financial Reporting Transparency on Internal Control Effectiveness: A Case Study of a Public Company in Indonesia Article Info ABSTRACT. In West Science Accounting and Finance (Vol. 1, Number 03).
Ocansey, E. O. N. D. (2026). Influence of Professional Skepticism on Audit Evidence Quality and Audit Report Quality: Evidence from an Emerging Audit Market. African Journal of Accounting and Financial Research, 9(1), 146. https://doi.org/10.52589/AJAFR-ETGGM5YF
Rashid, A., & Ghazi, M. S. (2021). Factors affecting Sharīʿah audit quality in Islamic banking institutions of Pakistan: a theoretical framework. Islamic Economic Studies, 28(2), 124–140. https://doi.org/10.1108/ies-07-2020-0025
Salukh, A., & Soewarno, N. (2022). Journal of Economics, Finance and Accounting Studies Financial Reporting Quality: The Effectiveness of the Corporate Governance Quality Evidence from Indonesia. https://doi.org/10.32996/jefas
Yulianto, A. R., Lokman, N., & Mohd Razali, F. (2025). Key Audit Matter and Audit Report Lag: A Preliminary Evidence from Indonesia. Journal of Emerging Economies and Islamic Research. https://doi.org/10.24191/jeeir.v13i1.4432
Abiodun, O. O., Siyanbola, T. T., & Aderibigbe, A. A. (2024). Corporate Governance and Financial Reporting Quality. International Journal of Economics, Business and Management Research, 08(09), 155–163. https://doi.org/10.51505/ijebmr.2024.8910
Ainun, S., & Islam Negeri Sultan Syarif Kasim Riau, U. (2024). Audit Quality: The Impact of Auditor Competence, Independence, and Professionalism with Evidence Competence as Mediator Nasrullah Djamil (Vol. 2, Number 3).
Aspiranti, T., Ali, Q., Sudrajad, O. Y., & Rusgianto, S. (2023). Shariah governance reporting of Islamic banks: An insight from Malaysia. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2247220
Ayu, S. A., Maisya Pratiwi, & Aryuna, W. (2024). The Effectiveness of Sharia Audit in Islamic Financial Institution. EKONOMIKA SYARIAH : Journal of Economic Studies, 8(2), 219–230. https://doi.org/10.30983/es.v8i2.8977
Bechihi, O., & Nafti, O. (2025). Corporate governance and sharia board: enhancing disclosure compliance in Islamic banks of MENA region. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-11-2024-0865
Blessing, O. C., Amarachi, W. D., & David, C. O. (2025). Audit Evidence and Small and Medium Enterprises (SMEs) Failure. Journal of Business and Econometrics Studies, 1–5. https://doi.org/10.61440/JBES.2025.v2.89
Cen, S. H., & Alur, R. (2024, October 29). From Transparency to Accountability and Back: A Discussion of Access and Evidence in AI Auditing. Proceedings of the 4th ACM Conference on Equity and Access in Algorithms, Mechanisms, and Optimization, EAAMO 2024. https://doi.org/10.1145/3689904.3694711
Chohan, A. H., Ayaz, D., & Haq, U. (n.d.). Corporate Governance and Audit Quality in Islamic Banks in Emerging Asian Economies: A Literature Review. Journal of Development and Social, 6(2), 2709–6262. https://doi.org/10.47205/jdss.2025(6-II)38
Chrisna Putri, R., Perwita Sari, R., & Azmiyanti, R. (2024). Ekombis Review-Jurnal Ilmiah Ekonomi dan Bisnis The Influence Of Audit Fee And Competency On Audit Quality Moderated By Professionalism At KAPs In Indonesia. Ekombis Review: Jurnal Ilmiah Ekonomi Dan Bisnis, 12(4), 4069–4080. https://doi.org/10.37676/ekombis.v12i4
Darmawan, A. (2023). Audit Quality and Its Impact on Financial Reporting Transparency. Golden Ratio of Auditing Research, 3(1), 32–45. https://doi.org/10.52970/grar.v3i1.375
Fadila, E. F., Ramadhyani, Y. A., Saputri, Y. I., & Manurung, H. (2023). The Influence of Audit Fee, Audit Tenure, and Auditor Competency on Audit Quality: A Systematic Review. In Jurnal Ilmiah Manajemen Kesatuan (Vol. 11, Number 3).
IFSB. (2023). Navigating a Challenging Global Financial Condition Islamic Financial Services Industry. www.ifsb.org
Joseph Seun, K., Olusola Esther, I., & Adeyemi Wasiu, A. (2025). Unveiling Stewardship Theory: Emerging Trends and Future Direction. Journal of Business and African Economy E-ISSN, 11(2), 2025. https://doi.org/10.56201/jbae.v11.no2.2025.pg95.112
Kokina, J., Blanchette, S., Davenport, T. H., & Pachamanova, D. (2025). Challenges and opportunities for artificial intelligence in auditing: Evidence from the field. International Journal of Accounting Information Systems, 56. https://doi.org/10.1016/j.accinf.2025.100734
Lathifah, R. N., & Taufik, R. (2025a). Competencies of Shariah Auditors: Skills, Knowledge, and Challenges in Islamic Banking Practice. Journal of Islamic Contemporary Accounting and Business JICAB, 3(1).
Lathifah, R. N., & Taufik, R. (2025b). Competencies of Shariah Auditors: Skills, Knowledge, and Challenges in Islamic Banking Practice. Journal of Islamic Contemporary Accounting and Business JICAB, 3(1).
Mailindra, W., Agustiara, R., Ayudia, W., & Kerinci, I. (2023). Comparative Study of Financial Performance of Islamic Banks and Conventional Banks in Indonesia. www.ojk.go.id
Manneh, K., Yuhertiana, I., & Sholihatin, E. (2025). The Relationship Between Auditor Independence and Audit Quality: Evidence from Developing Economies. Jurnal Inovasi Akuntansi (JIA), 3(2), 212–228. https://doi.org/10.36733/jia.v3i2.13045
Maria Ulfa, A., & Ermian Challen, A. (2020). Good Corporate Governance on Integrity of Financial Statements.
Muhammad Naeem, st, Hamid Ullah, nd, & Shahid Jan, rd. (2021). The Impact of ESG Practices on Firm Performance: Evidence From Emerging Countries. Indian Journal of Economics and Business, Vol. 20 No. 1(1). http://www.ashwinanokha.com/IJEB.php
Mulyadi, R., Eka Jaya Ramdhani, H., & Suheny, E. (2022). The Effect of Corporate Governance, Audit Quality, and Auditor Industry Specialization on the Integrity of Financial Statements. Journal of Applied Business, Taxation and Economics Research, 1(3), 231–242. https://doi.org/10.54408/jabter.v1i3.43
Nadiya Amany, A., Fakhruddin, I., Cinintya Pratama, B., & Hapsari, I. (2024). THE EFFECT OF AUDIT QUALITY, AUDIT COMMITTEE, AND ISLAMIC CORPORATE GOVERNANCE ON ISLAMIC CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE IN ISLAMIC BANKING ON PERIOD 2018-2022. International Journal of Social Science, Management and Economics Research, 2(4), 36–54. https://doi.org/10.61421/ijssmer.2024.2403
Nugrahanti, T. P., Sudarmanto, E., Andani, M., & Judijanto, L. (2023). The Effect of Audit Quality, Auditor Independence, and Financial Reporting Transparency on Internal Control Effectiveness: A Case Study of a Public Company in Indonesia Article Info ABSTRACT. In West Science Accounting and Finance (Vol. 1, Number 03).
Ocansey, E. O. N. D. (2026). Influence of Professional Skepticism on Audit Evidence Quality and Audit Report Quality: Evidence from an Emerging Audit Market. African Journal of Accounting and Financial Research, 9(1), 146. https://doi.org/10.52589/AJAFR-ETGGM5YF
Rashid, A., & Ghazi, M. S. (2021). Factors affecting Sharīʿah audit quality in Islamic banking institutions of Pakistan: a theoretical framework. Islamic Economic Studies, 28(2), 124–140. https://doi.org/10.1108/ies-07-2020-0025
Salukh, A., & Soewarno, N. (2022). Journal of Economics, Finance and Accounting Studies Financial Reporting Quality: The Effectiveness of the Corporate Governance Quality Evidence from Indonesia. https://doi.org/10.32996/jefas
Yulianto, A. R., Lokman, N., & Mohd Razali, F. (2025). Key Audit Matter and Audit Report Lag: A Preliminary Evidence from Indonesia. Journal of Emerging Economies and Islamic Research. https://doi.org/10.24191/jeeir.v13i1.4432
Published
2026-07-13
How to Cite
Kijera, F., Iwan Fakhruddin, Rezky Pramurindra, Suryo Budi Santoso, & Ira Hapsari. (2026). Audit Quality, Audit Competence, And Audit Evidence as Determinants of Financial Transparency: Evidence from Indonesian Islamic Banks. International Journal of Education, Vocational and Social Science , 5(03), 4550-4572. https://doi.org/10.63922/ijevss.v5i03.5097
Contact Person +6282139474255
Email : ijevss@citakonsultindo.or.id / editor.ijevss@gmail.com
