The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province)

Studies Management and Finance Economics, of Journal 0504-2644 (online): ISSN 0490,-2644 (print): ISSN 5202 November 11 Issue 80 Volume 8.317 Factor: Impact ,13-i11-10.47191/jefms/v8 DOI: Article 6572 -7252 No: Page JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7252 The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) Muhamad Hamdi1, Ayi Ahadiat2, Zainnur M. Rusdi3 1,2,3Master of Management, University of Lampung ABSTRACT: This study aims to analyze the influence of Transformational Leadership and Motivation on Audit Quality, with Organizational Culture as a moderating variable, within the Regional Inspectorate throughout Lampung Province. The research background is driven by the scarcity of studies on audit quality that utilize organizational culture as a moderator, especially in public sector internal audits, and the observed variations in financial statement opinion achievements and the Internal Audit Capability Model (IA-CM) at the Lampung Regional Inspectorate. This research employs a quantitative design using a survey approach via G-form questionnaires. The research sample consisted of 140 auditors selected through purposive sampling from a population of 447 active auditors. Data was analyzed using the Partial Least Squares Structural Equation Modelling (PLS-SEM) method with SmartPLS software, applying a second-order approach through the Embedded Two-Stage Approach method. The results show that Transformational Leadership has a significant and positive effect on Audit Quality. Motivation was also found to have a significant and positive effect on Audit Quality. Furthermore, Organizational Culture was proven to significantly and positively moderate the influence of Transformational Leadership on Audit Quality, as well as significantly and positively moderate the influence of Motivation on Audit Quality among auditors at the Regional Inspectorate throughout Lampung Province. The implications of these findings highlight the importance for Regional Inspectorate leaders to clarify and reinforce shared goals, adopt an individualized approach in interacting with auditors, and integrate continuous career development. Additionally, leaders must actively enforce an organizational culture that upholds objectivity, independence, and meritocracy to enhance audit quality. This study contributes to a deeper understanding of the determinants of audit quality in the internal public sector and provides practical recommendations for Regional Inspectorates in their efforts to improve audit performance. For future research, it is suggested to explore other variables not examined in this study to explain audit quality with organizational culture as a moderator, particularly in the context of internal public audit. KEYWORDS: Transformational Leadership, Motivation, Audit Quality, Organizational Culture, Regional Inspectorate. I. INTRODUCTION In an era of globalization and increasing demands for transparency, audit quality has become one of the important indicators for assessing the accountability and performance of public sector organizations. The Regional Inspectorate, as the Government's Internal Supervisory Apparatus (APIP), plays a crucial role in ensuring that regional financial management and development run effectively, efficiently, and in accordance with laws and regulations. However, achieving optimal audit quality cannot be separated from internal organizational factors such as leadership, motivation, and organizational culture. Transformational leadership, as a leadership style capable of inspiring and motivating subordinates, is believed to improve audit quality by creating an innovative and goal-oriented work environment. On the other hand, auditor work motivation is also a determining factor in producing quality audits, because motivated auditors tend to be more thorough, professional, and committed in carrying out their duties. However, the influence of transformational leadership and motivation on audit quality cannot be viewed separately from the encompassing organizational culture. Organizational culture, as a system of shared values and norms, can strengthen or weaken the influence of leadership and motivation on audit quality. Audit quality is a crucial factor in maintaining the integrity of an entity's financial statements. Inaccurate financial statements The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7253 can cause significant losses to various parties, be it investors, management, regulators, or other parties who rely on this information to make economic decisions. DeAngelo (1981) states that audit services are desirable as a supervisory tool due to the potential conflict of interest between owners and management and various classes of the entity's securities holders. DeAngelo (1981) further explains that the quality of audit services is defined as two inseparable things: the possibility that auditors can find deviations in the client's accounting system and report them. Xiao et al (2020) state that audit has an important role as an external corporate governance mechanism, and the governance effect of audit is directly reflected in audit quality. The audit quality produced by auditors is a direct manifestation of the performance of those human resources. When an auditor can produce a high-quality audit, it happens because the auditor carefully and diligently follows standard procedures, explores various perspectives, makes critical decisions, and creatively sees and detects how a possible deviation or violation can occur within the audit object/auditee. Auditors bring professional capabilities, technical knowledge, and integrity which are the main foundations in carrying out their duties effectively and efficiently. Auditor performance includes their ability to meticulously carry out audit procedures, a sense of responsibility, and commitment to professional ethical standards. With good HR performance, auditors will produce accurate, transparent, and high-quality audits, thereby ensuring public trust and the sustainability of the audited organization. There have been past researchers that use audit quality as a measurement of auditor’s performance. Knechel (2013) formulates definitions, indicators, and drivers of audit quality and frames audit quality as a result at the engagement-level outcome generated by inputs and processes (human capital, supervision, methods). While DeAngelo (1981) defines audit quality and relates it to auditor attributes that affect performance and establishes audit quality as a result of auditor effort, resources, and incentives, i.e., the performance outcome of the audit process. Furthermore, DeFond & Francis (2005) reveal that audit quality is the result of auditor actions and decisions. Similar sentiments were also expressed by Nelson & Tan (2005), who say that auditor performance in decision-making mediates audit quality outcomes. Francis (2011) proposes that audit quality is a function of auditor performance input. And lastly, DeFond & Zhang (2014) also explain that proxies for general audit quality inherently reflect collective auditor performance. II. LITERATURE REVIEW A. Transformational Leadership Burns (1978) explained that transformational leadership refers to a mutual process between leaders and followers, where both parties elevate each other to higher levels of morality and motivation. Transformational leaders inspire followers through vision, intellectually challenge them, and consider their individual needs, ultimately driving beneficial change for both individuals and organizations. Bass & Avolio (2000) further developed this leadership style within the framework known as the Full Range Leadership Model (FRLM), making it measurable through their model, the Multifactor Leadership Questionnaire (MLQ). Wijayanti & Saputri (2022) stated that transformational leaders are capable of inspiring and motivating team members to go beyond established expectations. Leaders using this style create an appealing vision, set high standards, and recognize and support team members for their performance. In the context of auditing, transformational leaders challenge their teams to think creatively and innovatively, seeking new ways to enhance audit efficiency and develop professional skills. They also pay clos er attention to team members’ career development and motivate them to achieve their full potential. This leadership style is highly effective in increasing team commitment to audit quality and maintaining high ethical standards. B. Motivation Fitriani (2019) stated that motivation plays a crucial role in determining individual performance in any profession, including the auditing profession. This motivation is particularly important in the field of auditing because motivated auditors are likely to work harder, be more meticulous, and show greater commitment when carrying out audits, ultimately producing high-quality and reliable reports. Deci & Ryan (2000) explained a theory related to motivation called Self-Determination Theory, which generally categorizes motivation into two main types: intrinsic motivation and extrinsic motivation. Intrinsic motivation comes from within the individual, such as a sense of responsibility, satisfaction from doing a good job, and the desire to make a positive contribution. In contrast, extrinsic motivation stems from external factors, such as salary, bonuses, recognition from supervisors, or job promotions. Auditor motivation influences how auditors approach their work, how they handle difficult tasks, and the extent to which they uphold professional ethics and audit quality. Motivated auditors will be more focused in performing their duties, which in turn enhances the quality of the audit results they produce. C. Organizational Culture According to Daft (2005), organizational culture is generally viewed as a set of core values, assumptions, understandings, an d The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7254 norms shared by members of an organization and taught to new members as the correct way of thinking and behaving. Furthermore, Wicaksono (2018) explains that organizational culture is the fundamental pattern of assumptions created by a group within an organization as a way to solve external problems and to interact with internal members. In the context of auditing, organizational culture refers to the extent to which an audit firm instills high ethical and professional values in its operations. This culture shapes the mindset and behavior of auditors in carrying out their duties and guides them to maintain integrity, objectivity, and high audit quality. This culture not only functions as a system of shared values among organizational members but also shapes how they interact with one another, make decisions, and complete tasks and challenges. In the auditing context, organizational culture can influence nearly every aspect of audit performance—from how auditors collaborate and adhere to ethical standards, to how they manage risks and handle issues that arise during the audit process. A healthy and supportive organizational culture creates a conducive environment for achieving high-quality audit results. Conversely, a poor or unsupportive culture can lead to lower audit quality and reduce the effectiveness of the audit team. In the auditing world, where integrity and objectivity are key, a strong and positive organizational culture is essential to maintaining work quality and preserving the credibility of the audit organization. Wallach (1983) developed a framework to diagnose organizational work practices known as the Organizational Culture Index (OCI). Through the OCI, Wallach explained that an organization’s culture can be one or a combination of three categories — bureaucratic, innovative, or supportive: 1. Bureaucratic culture emphasizes structure, formal rules, and control. This culture is characterized by clear procedures, hierarchical decision-making, and a focus on stability and predictability. Such a culture ensures consistency and reliability in operations but can lead to rigidity and resistance to change if the rules and procedures become overly restrictive. 2. Innovative culture focuses on creativity, adaptability, and risk-taking. Organizations with this type of culture encourage the generation of new ideas, experimentation, and flexibility in responding to environmental changes. This culture promotes growth, innovation, and competitive advantage, although it may lose stability if not balanced with some degree of structure. 3. Supportive culture prioritizes people, relationships, and trust. This culture fosters teamwork, collaboration, and mutual respect in a friendly and inclusive environment. Such a culture helps build strong morale and employee loyalty, although an excessive emphasis on harmony can sometimes hinder the making of difficult but necessary decisions. D. Audit Quality DeAngelo (1981) explains that audit quality refers to the identification and reporting of material misstatements by external auditors. The quality of audit services is defined as the market’s assessment of how well a particular auditor can detect violations in a client’s accounting system and report those violations. Audit quality does not depend solely on the technical aspects of the auditor’s work but also on how the auditor conducts the audit while maintaining high ethical standards and reporting findings independently. In line with DeAngelo, Rahayu and Suryanawa (2020) also explain that audit quality can be described through two important aspects: auditor’s ability to detect material misstatements and auditor’s independence in providing opinions. High audit quality requires auditors to have the ability to identify material misstatements in financial statements that may affect economic decisions made by external parties such as investors, creditors, and regulators. This ability is driven by the auditor’s technical skills, in-depth knowledge of accounting standards, and understanding of the complexity of the company’s transactions. On the other hand, independence is a fundamental principle in auditing that ensures auditors are not influenced by client pressures or interests. An independent auditor can provide an objective and honest opinion regarding the audited financial statements. Rahayu and Suryanawa (2020) emphasize that without independence, auditors may not be able to provide a truthful and unbiased opinion, which can undermine audit quality. Therefore, audit quality is strongly influenced by how well auditors can maintain their independence and the extent to which they can identify material misstatements affecting a company’s financial statements. E. Theoretical Framework and Hypothesis This study was conducted using four variables: two independent variables, one dependent variable, and one moderating variable. The independent variables used are Transformational Leadership (X1) and Motivation (X2). The dependent variable in this study is Audit Quality (Y), while the variable used as a moderator of the relationship between the independent and dependent variables is Organizational Culture (Z). Based on the literature, the study proposes the following hypotheses: • H1: Transformational Leadership has a positive and significant effect on Audit Quality. • H2: Motivation has a positive and significant effect on Audit Quality. • H3: Organizational Culture positively and significantly moderates the effect of Transformational Leadership on Audit Quality. • H4: Organizational Culture positively and significantly moderates the effect of Motivation on Audit Quality The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7255 Figure 1. Conceptual Model III. METHODOLOGY In this study, the research type used is quantitative research with an associative approach. Sekaran and Bougie (2016) explain that quantitative research is conducted on a specific population or sample as the object of study. Associative resear ch aims to determine the relationship between two or more variables. Furthermore, Sekaran and Bougie (2016) also state that quantitative research is causal in nature, meaning it aims to determine whether there is an influence of independent variables on dependent variables. Sekaran and Bougie (2016) explain that a moderating variable is one that has a strong contingent effect on the relationship between an independent variable and a dependent variable. The presence of this third variable (the moderating variable) modifies the relationship between the independent and dependent variables. A. Study Design : Quantitative research using the survey method of a questionnaire B. Study Location : This study was conducted on all regional inspectorates in Lampung Province, amounting to 16 offices. C. Study Duration : The study is done from August 2025 to September 2025 D. Population and Sample Size : With 447 population across 16 offices, GPower determines a minimum of 107 sampling size. Furthermore, the sampling is stratified to each office’s total auditor so that the study can infer result accordingly and fairly. The final count of respondent answers’ that came back was 140 respondents. E. Subject & Selection Method : The population and sample of this study is the auditors within the 16 offices of regional inspectorates in Lampung Province. The subject is selected on the criteria of active duty and one-year minimum experience as auditor. F. Procedure Methodology : The study employed survey method to collect primary data from auditors. The collection is done through the medium of Google Forms, distributed to internal communication group (WA Group) of each office. The questionnaire included 4 variables, each with their own dimension except Audit Quality. Each item of the questionnaire was measured using 5-point Likert scale (1 = strongly disagree, 5 = strongly agree). The study analysis is done using codification to substitute the description of the variables and dimensions, as shown in the following table: Table 1. Study Codification Description Code Transformational Leadership, as independent variable with following dimensions: • Intellectual Stimulation (4 indicators) • Idealized Influence (Behaviour) (4 indicators) • Inspirational Motivation (4 indicators) • Individualized Consideration (4 indicators) • Idealized Influence (Attributed) (4 indicators) X1 X1.1 X1.2 X1.3 X1.4 X1.5 Motivation, as independent variable with following dimensions: • Intrinsic Motivation (7 indicators) • Extrinsic Motivation (7 indicators) X2 X2.1 X2.2 Organizational Culture, as moderating variable with following dimensions: • Bureaucratic Culture (8 indicators) • Innovative Culture (8 indicators) Z Z.1 The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7256 • Participative Culture (8 indicators) Z.2 Z.3 Audit Quality, dependent variable without dimensions (12 indicators) Y G. Statistical Analysis Descriptive statistics are used to provide a general overview of the research data and to summarize respondents’ answer characteristics in a concise and systematic manner. According to Sekaran and Bougie (2016), descriptive statistics help researchers understand data distribution, central tendency, and variation before conducting further analysis. Common measures include the mean, which represents the average response; the median, which indicates the midpoint of the data distribution; and the standard deviation, which reflects the level of variability among responses (Hair et al., 2021). These measures reveal whether respondents tend to agree or disagree with the given statements and indicate the consistency of their perceptions toward each variable examined. The following table presents the descriptive statistical results of this study: Mean Median Skala Min Skala Max Std. Deviation X1.1.01 4.043 4.000 1.000 5.000 1.027 X1.1.02 3.993 4.000 1.000 5.000 1.045 X1.1.03 4.036 4.000 1.000 5.000 1.017 X1.1.04 4.093 4.000 1.000 5.000 1.013 X1.2.01 4.021 4.000 1.000 5.000 1.079 X1.2.02 4.250 4.000 2.000 5.000 0.838 X1.2.03 4.093 4.000 1.000 5.000 1.013 X1.2.04 4.029 4.000 1.000 5.000 1.042 X1.3.01 4.057 4.000 1.000 5.000 1.027 X1.3.02 4.021 4.000 1.000 5.000 1.124 X1.3.03 4.093 4.000 1.000 5.000 0.978 X1.3.04 3.964 4.000 1.000 5.000 1.161 X1.4.01 4.114 4.000 1.000 5.000 0.942 Mean Median Skala Min Skala Max Std. Deviation X1.4.02 4.093 4.000 1.000 5.000 0.955 X1.4.03 4.036 4.000 1.000 5.000 1.065 X1.4.04 4.107 4.000 1.000 5.000 0.991 X1.5.01 4.029 4.000 1.000 5.000 1.055 X1.5.02 4.050 4.000 1.000 5.000 1.065 X1.5.03 4.064 4.000 1.000 5.000 1.009 X1.5.04 3.964 4.000 1.000 5.000 1.155 X2.1.01 4.114 4.000 1.000 5.000 1.008 X2.1.02 4.021 4.000 1.000 5.000 1.072 X2.1.03 4.086 4.000 1.000 5.000 1.018 X2.1.04 4.057 4.000 1.000 5.000 1.074 X2.1.05 4.036 4.000 1.000 5.000 0.989 X2.1.06 4.050 4.000 1.000 5.000 0.889 X2.1.07 4.036 4.000 1.000 5.000 0.967 X2.2.01 4.093 4.000 1.000 5.000 1.114 X2.2.02 3.964 4.000 1.000 5.000 1.058 X2.2.03 4.021 4.000 1.000 5.000 1.052 X2.2.04 3.986 4.000 1.000 5.000 1.000 X2.2.05 4.086 4.000 1.000 5.000 1.003 The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7257 X2.2.06 4.079 4.000 1.000 5.000 0.972 X2.2.07 4.036 4.000 1.000 5.000 1.065 Z.1.01 3.836 4.000 1.000 5.000 1.199 Z.1.02 3.950 4.000 1.000 5.000 1.078 Z.1.03 3.857 4.000 1.000 5.000 1.199 Z.1.04 4.000 4.000 1.000 5.000 1.076 Z.1.05 3.907 4.000 1.000 5.000 1.108 Z.1.06 3.757 4.000 1.000 5.000 1.152 Z.1.07 3.886 4.000 1.000 5.000 1.103 Z.1.08 3.821 4.000 1.000 5.000 1.091 Z.2.01 3.914 4.000 1.000 5.000 1.174 Z.2.02 3.836 4.000 1.000 5.000 1.199 Z.2.03 3.914 4.000 1.000 5.000 1.105 Z.2.04 3.857 4.000 1.000 5.000 1.240 Z.2.05 3.850 4.000 1.000 5.000 1.121 Z.2.06 3.821 4.000 1.000 5.000 1.071 Z.2.07 3.886 4.000 1.000 5.000 1.141 Z.2.08 3.829 4.000 1.000 5.000 1.089 Z.3.01 3.829 4.000 1.000 5.000 1.069 Z.3.02 3.864 4.000 1.000 5.000 1.110 Z.3.03 4.000 4.000 1.000 5.000 1.115 Z.3.04 3.864 4.000 1.000 5.000 1.110 Z.3.05 3.886 4.000 1.000 5.000 1.128 Z.3.06 3.871 4.000 1.000 5.000 1.139 Z.3.07 3.914 4.000 1.000 5.000 1.099 Z.3.08 3.879 4.000 1.000 5.000 1.180 Y.01 3.814 4.000 1.000 5.000 1.011 Y.02 3.936 4.000 1.000 5.000 1.090 Y.03 3.950 4.000 1.000 5.000 1.009 Y.04 3.893 4.000 1.000 5.000 0.954 Y.05 3.964 4.000 1.000 5.000 0.944 Y.06 3.993 4.000 1.000 5.000 1.011 Y.07 3.864 4.000 1.000 5.000 1.037 Y.08 3.929 4.000 1.000 5.000 1.005 Y.09 3.929 4.000 1.000 5.000 0.990 Y.10 3.964 4.000 1.000 5.000 0.959 Mean Median Skala Min Skala Max Std. Deviation Y.11 3.857 4.000 1.000 5.000 0.990 Y.12 3.936 4.000 1.000 5.000 1.009 Y.01 3.814 4.000 1.000 5.000 1.011 Y.02 3.936 4.000 1.000 5.000 1.090 The Transformational Leadership (X1) variable has an average value of 4.05 with a standard deviation of 1.04, indicating that respondents generally perceive the application of transformational leadership among regional inspectorate leaders in Lampung Province as good and relatively consistent across individuals. The Motivation (X2) variable shows an average of 4.05 and a standard deviation of 1.02, suggesting that auditors within the inspectorate environment possess high work motivation and relatively homogeneous perceptions regarding motivational indicators. The Organizational Culture (Z) variable records an average of 3.87 with a standard deviation of 1.12, reflecting a moderately strong organizational culture, although with slightly greater variation in The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7258 perceptions compared to other variables. Finally, the Audit Quality (Y) variable has an average of 3.91 and a standard deviation of 1.02, showing that audit quality is perceived as good and consistently evaluated by respondents. Overal l, these descriptive statistics indicate a positive tendency across all variables, meaning respondents hold favourable perceptio ns toward transformational leadership, work motivation, organizational culture, and audit quality. The relatively low standard deviations suggest that respondents’ perceptions are fairly uniform, making the data stable and representative for subsequent inferential analysis. IV. RESULT This study uses SEM analysis with SmartPLS software and since the variables consisted of dimensions and indicators, this study is decided to be done with the embedded two-stage approach. The first stage is done to get the latent value of the low order/first order, that is to understand the interaction between indicators to its dimensions first, rather than indicators straight to variables. The results are as following: Figure 2. Stage 1 Model / Low Order Variable Dimension Indicator Loading Factor AVE Cronbach Alpha Composite Reliability Transformational Leadership Intellectual Stimulation X1.1.01 0,869 0,707 0,861 0,906 X1.1.02 0,841 X1.1.03 0,835 X1.1.04 0,817 Idealized Influence (Behaviour) X1.2.01 0,893 0,695 0,853 0,901 X1.2.02 0,764 X1.2.03 0,828 X1.2.04 0,845 Inspirational Motivation X1.3.01 0,866 0,736 0,880 0,918 X1.3.02 0,845 X1.3.03 0,857 The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7259 X1.3.04 0,863 Individualized Consideration X1.4.01 0,830 0,684 0,845 0,896 X1.4.02 0,761 X1.4.03 0,872 X1.4.04 0,841 Idealized Influence (Attributed) X1.5.01 0,896 0,747 0,886 0,922 X1.5.02 0,870 X1.5.03 0,813 X1.5.04 0,875 Variable Dimension Indicator Loading Factor AVE Cronbach Alpha Composite Reliability Motivation Intrinsic Motivation X2.1.01 0,792 0,644 0,908 0,927 X2.1.02 0,850 X2.1.03 0,796 X2.1.04 0,817 X2.1.05 0,795 X2.1.06 0,763 X2.1.07 0,802 Extrinsic Motivation X2.2.01 0,829 0,661 0,914 0,932 X2.2.02 0,810 X2.2.03 0,830 X2.2.04 0,813 X2.2.05 0,844 X2.2.06 0,776 X2.2.07 0,787 Variable Dimension Indicator Loading Factor AVE Cronbach Alpha Composite Reliability Organizational Culture Bureaucratic Culture Z.1.01 0,857 0,700 0,939 0,949 Z.1.02 0,851 Z.1.03 0,843 Z.1.04 0,822 Z.1.05 0,869 Z.1.06 0,847 Z.1.07 0,806 Z.1.08 0,797 Innovative Culture Z.2.01 0,805 0,684 0,934 0,945 Z.2.02 0,873 Z.2.03 0,829 Z.2.04 0,837 Z.2.05 0,813 Z.2.06 0,821 Variable Dimension Indicator Loading Factor AVE Cronbach Alpha Composite Reliability Z.2.07 0,840 Z.2.08 0,795 The Effect of Transformational Leadership and Motivation on Audit Quality Moderated by Organizational Culture (an Empirical Study on Regional Inspectorates Across Lampung Province) JEFMS, Volume 08 Issue 11 November 2025 www.ijefm.co.in Page 7260 Participative Culture Z.3.01 0,819 0,692 0,937 0,947 Z.3.02 0,841 Z.3.03 0,814 Z.3.04 0,845 Z.3.05 0,817 Z.3.06 0,848 Z.3.07 0,833 Z.3.08 0,840 Variable Indicator Loading Factor AVE Cronbach Alpha Composite Reliability Audit Quality Y.01 0,802 0,601 0,940 0,948 Y.02 0,821 Y.03 0,776 Y.04 0,793 Y.05 0,760 Y.06 0,788 Y.07 0,717 Y.08 0,802 Y.09 0,733 Y.10 0,756 Y.11 0,755 Y.12 0,797 Referring to the results above, the validity test for every indicator of every variable shows that the factor loadings are valid, as each loading value exceeds 0.7. The lowest loading is 0.717 (Y.07) and the highest is 0.821 (X1.4.02). The next evaluation, convergent validity, assessed through the Average Variance Extracted (AVE), also meets the criterion, with all AVE values greater than 0.5, indicating that all construct has good convergent validity. Furthermore, reliability testing using Composite Reliability (CR) and Cronbach’s Alpha produced values of exceeding the 0.7 threshold, with X1.4’s Cronbach Alpha = 0.845 and X1.4’s CR = 0.896, as the lowest score. Therefore, it can be concluded that all construct demonstrates strong validity and reliability. The second stage is conducted at the dimension level using the latent variable scores (LVS) obtained from the first stage. This process aims to evaluate the validity of the dimensions, as well as to test the validity and reliability of the constructs or variables. In addition, the results from this stage serve as the foundation for hypothesis testing in the study. The results are as following: Figure 3. Stage 2 Model / High Order