The Role of Auditor Procedures in Reducing Management Policies for Confidential Reserves for Earnings Management

In this research, in light of the problem he addressed is the role of the management of reserves and secret provisions on net income and its relationship with management, shareholders, and other related parties. Clarifying the role of the auditor in exposing the practices of managing reserves and confidential provisions that may cause misstatements in financial reports and statements, to achieve a balance between the objectives of management and the objectives of shareholders and other parties.
With the role of adequate disclosure of these policies and the auditor's procedures in reducing their improper use by management, it was concluded that the change in accounting policies affects the handling of reserves and this would affect the earnings policies, and that the existence of transparency and adherence to them would give high reliability in the financial statements in the financial statements.
The role of the auditor is also indicated to ensure the registration and disclosure of investments according to their categories, and the management to carry out accounting treatments for each item according to accounting principles. Emphasizing the inquiry from management by stating the reason for the change in accounting policies, and the auditor's responsibility to develop an audit program that takes into account the possibility that management may not disclose all data related to financial activity. It must ensure that the accounting policies adopted do not affect the realism of accounting information, the interests of beneficiaries, owners, and profit management.