Abstract
Purpose The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used in this study are selected by looking at the characteristics of the company and the characteristics of an auditor. Design/methodology/approach Company characteristics were proxied by the audit committee effectiveness, financial condition, accounting complexity and profitability, whereas auditor characteristics were proxied with auditor reputation, audit tenure and auditors industry specialization. Populations of this study were all manufacturing companies listed in Indonesian Stock Exchange in 2014–2016. Based on the purposive sampling method, the number of samples obtained from 231 companies was 77. Multiple linear regression method was used to analyze this study. Hypothesis testing was done by statistical t-test (partial). Findings The results showed that partially variables of the audit committee effectiveness and profitability had a significant negative effect on audit report lag while the variable financial condition had a significant positive effect on audit report lag. Meanwhile, variables of the accounting complexity, auditor reputation, audit tenure and auditors’ industry specialization did not show significant influence on audit report lag. Originality/value This study tests both company’s and auditor’s characteristic on audit report lag that as far as authors know never been tested simultaneously.
Highlights
Shareholders are entitled to obtain information on the financial condition and results of the company’s operations
3.4 Data analysis technique The analysis technique used in this research is multiple linear regression analysis which is used to know the influence of independent variables to dependent variable
Statistical calculations done by using the Statistics Packages For Social Science (SPSS) version 20 program are as follows: ARLi;t 1⁄4 a þ b1ACEFECi;t þ b2ZFCi;t þ b3SUBSi;t þ b4ROAi;t þ b5REPi;t þ b6TENi;t þ b7ASIi;t þ Ƹi;t: The regression model in this study is as follows: ARLi,t 1⁄4 audit report lag; α 1⁄4 intercept; ACEFECi,t 1⁄4 effectiveness of the audit committee; ZFCi,t 1⁄4 financial condition; SUBSi,t 1⁄4 accounting complexity; ROAi,t 1⁄4 profitability; REPi,t 1⁄4 auditor reputation; TENi,t 1⁄4 tenure audit; ASIi,t 1⁄4 industry specialization of auditors; Ƹi,t 1⁄4 size of error for company
Summary
Shareholders are entitled to obtain information on the financial condition and results of the company’s operations. The information is used by the shareholders to evaluate the performance of the management and make a decision on whether the company is providing benefits or not to them. The financial statements are a form of management accountability for the management of the entity’s resources entrusted to it. The financial statements are a means of communication of the management to shareholders. In order for the financial statements to be valuable to the user at the time of decision making, the financial statements should contain qualitative characteristics that are characteristic of financial statement information. The qualitative characteristics of financial statements based on the Basic Framework of Preparation and Presentation of Financial Statements of Financial Accounting Standards are understandable, relevant, reliable and comparable. Relevant qualitative and reliable qualitative characteristics are the primary quality characteristics of a financial report.
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