Hence the regulator in Indonesia requires companies listed on the Indonesian stock exchange (IDX) to have an audit committee (AC).Īccording to the regulations of Financial Services Authority (Otoritas Jasa Keuangan) (2015) AC members must understand the company's business and financial reports, minimum must have one member with an educational and experience background in accounting and finance, review the financial information to be issued by the company, conducts a review of compliance with laws and regulations relating to company activities, reviews the implementation of audits by internal auditors. Therefore, investors will make wrong decisions and the company has the potential perform tax evasion. The company's failure to prepare transparent financial statements has an impact on income reports that are not in accordance with the company's performance. Revenue is the most important component in financial statements and it is the main concern of creditors, shareholders and board of directors so that managers practice earnings management by manipulating accounting policies to change company performance ( Guan, Lin, & Fang, 2014).
Keywords: Audit committee expertise number of meetings earnings management Introduction The results of this study suggest that AC expertise, AC meeting and AC independence has influence in reducing earnings management practice.
Panel data analysis using the generalized method of moment estimation is being conducted to control for the individual effect and unobserved heterogeneity as well as to mitigate the endogenous problem. This study uses Indonesian listed companies’ financial data from 2012 – 2016. independence, expertise, and number of meeting) with the earnings management practice. Hence this study examines the audit committee (AC) characteristic (i.e. In addition, the audit committee has the obligation to conduct audit committee meetings at least once in three months. There are some cases of Indonesian listed companies practicing earnings management to reduce tax payments while at the same time shows increasing income, despite the requirement to have an audit committee, audit committees in Indonesia should be led by an independent director and must have the financial capability to oversee the performance of management.