Revisiting Auditor Independence through the Lens of Organizational Power: Evidence from a Quantitative Case Study in Management Accounting

Abstract

Auditor independence is essential for ensuring objectivity and reliability in management accounting practices. However, organizational power structures may influence auditors’ professional judgment and independence. This study examines the effect of organizational power on auditor independence among internal auditors and management accounting professionals in Central Java, Indonesia. A quantitative explanatory survey was conducted involving 150 respondents from 15 medium- and large-sized organizations. Data were collected through structured questionnaires and analyzed using descriptive statistics, validity and reliability tests, and multiple regression analysis. The results show that organizational power significantly influences auditor independence, explaining 42.8% of the variance in auditor independence (R² = 0.428). Legitimate power, reward power, and expert power were found to have positive effects on auditor independence, while coercive power had a negative effect. Among these dimensions, expert power emerged as the strongest predictor of auditor independence. The findings highlight the importance of organizational power as a determinant of auditor independence and suggest that effective governance mechanisms are needed to strengthen auditor objectivity and reduce power-related pressures. This study contributes to the auditing and management accounting literature by extending the application of organizational power theory to auditor independence.