The Effect of Managerial Ability to Income Quality Moderated by Audit Quality. The Objective of this research is to examine the impact of managerial ability on earnings quality. This research uses manufacturing companies listed in the Indonesian Stock Exchange for the periods 2006-2008, in which 63 companies (189 firms-year) are used as samples. The managerial ability is measured using Data Envelopment Analysis (DEA). The earnings quality is measured by the extent that accruals map into cash flows. The quality of auditor is measured using the perception of the users of audit firm quality. Using Moderated Regression Analysis, the study finds evidence that the managerial ability had impact on the earnings quality, but auditor quality did not have an impact on the relationship between managerial ability and earnings quality.