International Journal of Management, Accounting and Economics Vol. 5, No. 9, September, 2018 ISSN 2383-2126 (Online) © Authors, All Rights Reserved www.ijmae.com 738 Audit Quality and Earnings Management: Review and Synthesis of Empirical Evidence Maya Ayu Safitri 1 Faculty of Economics and Business University of Jember, Jember, Indonesia Alwan Sri Kustono Faculty of Economics and Business University of Jember, Indonesia, Muhammad Miqdad Faculty of Economics and Business University of Jember, Indonesia, Abstract Earnings management (EM) is the choice of accounting policy by a manager to achieve multiple goals. EM activity can be divided into two types: accrual manipulation activity and real manipulation activity. However, both of these have a major difference: the accrual manipulation does not affect cash flow, whereas real manipulation affects cash flow. Whether misleading or not to the users of financial statements, good or bad for the practice, controversy arises when earnings management is associated with morals / ethics. EM practices are suspected to arise due to agency problems arising from a conflict of interest between the principal and the agent. In accordance with agency theory, the function of the independent auditor can reduce agency problems. A qualified auditor, trusted to provide trust to stakeholders about the performance of management. High-quality auditors are more likely to detect dubious accounting practices. Thus, in the context of research, audit quality is often regarded as an antecedent variable and a variable that can reduce the occurrence of EM practice. Furthermore, the practice of Accrual Earnings Management (AEM) and Real Earnings Management (REM) in some empirical results turns out to be a substitution. Keywords: Earnings management, agency problem, audit quality. Cite this article: Safitri, M. A., Kustono, A. S., & Miqdad, M. (2018). Audit Quality and Earnings Management: Review and Synthesis of Empirical Evidence. International Journal of Management, Accounting and Economics, 5(9), 738-750. 1 Corresponding Author’s Email: maya.safitri.mas@gmail.com