Audit Report Lag Research Articles

PENGARUH CORPORATE GOVERNANCE, PROFITABILITAS, UKURAN DAN KOMPLEKSITAS PERUSAHAAN TERHADAP AUDIT REPORT LAG

Abstract- The purpose of this study to examine how agency theory plays a role in determining the factors that affect audit report lag. The difference in outcomes on factors affecting audit report lag in Indonesia and in Malaysia can be due to differences in corporate culture, economic environment, and existing regulations. The test is empirically focused on corporate governance, profitability, firm size and complexity for audit report lag both in Indonesia and Malay. The test uses multiple linear regression method with purposive sampling technique at 308 companies listed on Indonesia Stock Exchange and 361 companies at Bursa Malaysia for the period of 2015. Test results show that profitability called profit or loss of company is the main reason company to immediately publish its financial statement, thus reducing the occurrence of audit report lag. While other factors show different results in both countries. Especially for capital market authorities in Indonesia, it is necessary to consider efforts to improve the timeliness of financial reporting in Indonesia in order to improve the quality of the capital market in order to compete with other developing countries in the ASEAN region.
 
 Keywords: agency theory, audit report lag, corporate governance

Shareholder Dissatisfaction and Subsequent Audit Outcomes

SYNOPSIS This study examines the association between shareholder dissatisfaction, as proxied using auditor ratification voting, and subsequent auditor effort and audit quality. We document that increases in shareholder dissatisfaction are associated with (1) higher audit fees and longer audit report lags, and (2) lower abnormal accruals and reduced likelihood of financial statement misstatements, in the subsequent period. These findings inform the debate about auditor ratification voting, as governance activists and some regulators argue to increase the role of shareholders in auditor selection despite opposition from some firms and the staff of the Securities and Exchange Commission. We provide empirical evidence that increases in shareholder dissatisfaction with the auditor are associated with increases in subsequent auditor effort and audit quality. This suggests that shareholder action (even nonbinding) may potentially influence subsequent audit outcomes.

The Influence Of Fee Audit, Financial Distress, And Profitability On Audit Delay In Manufacturing Company Sectors Mining Listed In Indonesian Stock Exchange 2014-2018

Abstract—This study is aimed to test the effect of Fee Audit, Financial Distress and Profitability on Audit Delay in manufacturing companies in the mining sector is listed on the Indonesia Stock Exchange 2014-2018. This research uses a quantitative research approach, which is measured by using multiple linear regression based methods with the help Eviews 10. The population in this study were manufacturing companies manufacturing mining listed on the Indonesia Stock Exchange (BEI) in 2014 until 2018. The sample was determined based on purposive sampling method, with a total sample of 18 manufacturing companies manufacturing mining sectors so that the total observation in the study this is as much as 90 observation. The data used in this study are secondary data. the official website of IDX : www.idx.co.id. Bassed on partial regresson analysis, variabel that have an influence on audit delay from manufacturing companies manufacturing mining listed on the Indonesia Stock Exchange (BEI) in 2014 until 2018are financial distress, the higher the financial distress, the company will experience financial distress and then the profitability the greater profits obtained by the company, the shorter the audit report lag, because the company wants to deliver good news. The result taht has no effect on the audit delay mining company is the fee audit variabel the size of the fee given does not affect audit delay, because the auditor will always work professionally.

Auditors’ response to readability of financial statement notes

PurposeThe main objective of the present study is to assess the potential impact of readability of financial statement notes on the auditor's report lag, audit fees and going concern opinion (GCO).Design/methodology/approachThe statistical population of this study includes all listed firms on the Tehran Stock Exchange (TSE) for the period of 2012–2017. The systematic elimination method is used for sampling and multiple regression and EViews software are used for testing the hypothesis models.FindingsThe obtained results show that there is a significant and positive relationship between audit report lags and readability of financial statements. Moreover, it is also revealed that readability of financial statements is positively associated with audit fees. Furthermore, the findings suggest a negative correlation between readability indexes and issuing GCOs, denoting hard-to-read statements is considered as a risk factor by auditors. Finally, the observations of our robustness tests suggest that the association between audit report lag and readability of financial statements is robust.Originality/valueThis is the first conducted investigation concerning auditor's response to the readability of financial statement notes in TSE. The outcome of current paper may pave the way for revising and developing Iranian accounting standards in order to give a fairer and clearer picture of financial reports.

Analisis Spesialisasi Industri Auditor dan Penerapan IFRS Terhadap Audit Report Lag pada Perusahaan Manufaktur di Indonesia

This study aims to determine the effect of Auditor Industry Specialization and Adoption of IFRS on Audit Report Lag which the Company size, and Loss as control variables. Manufacturing companies listed on the Indonesia Stock Exchange in 2014-2018 as sample population. This research used a purposive sampling technique as the sampling method. The number of samples was 103 companies for 5 years. The results show that the adoption of IFRS has a positive effect on Audit report lag. Whereas Auditor industry specialization has no effect on Audit report lag.

Faktor Internal Dan Eksternal Yang Mempengaruh Audit Report Lag

This study aims to determine the effect of profitability, solvency, company size, company age, audit opinion, and KAP reputation on audit report lag. The object of this research is mining companies listed on the Indonesia Stock Exchange (IDX) in 2015-2017. The method used in this study is quantitative and the data source used is secondary data. The sample in this study were mining companies listed on the Indonesia Stock Exchange (IDX) in 2015-2017. The sampling technique in this study used a purposive sampling method. The data analysis used in this study is multiple linear regression analysis. The results of this study indicate that (1) profitability, solvability, company size, company age, audit opinion, and KAP reputation simultaneously had a significant effect on audit report lag; (2) profitability has a negative effect on audit report lag; (3) solvency has a positive effect on audit report lag; (3) company size does not negatively affect audit report lag; (4) company age negatively affects audit report lag; (5) audit opinion does not negatively affect audit report lag (6) KAP reputation does not negatively affect audit report lag; (7) audit opinion does not have the most dominant influence on audit report lag.

Analisis Pengaruh Struktur Kepemilikan dan Pertumbuhan Perusahaan terhadap Keterlambatan Audit

This main focus of this study is to analysis the effect of the company ownership and company growth on audit report lag. The target sample of this study consists of companies listed in Indonesian Stock Exchange (IDX) during 2014-2018. This study using purposive sampling method to collected data. There are 428 companies that required and proceed with panel regression to analyze the effect of independent variable on dependen variable. The result however show that only foreign ownership has significant impact on audit report lag, but managerial ownership, institutional ownership, company growth, and ownership concentration has insignificant impact on audir report lag.

The demand and supply timely financial reports

PurposeThis paper is motivated by the Financial Markets Authority’s (FMA) investigation into reporting delays of New Zealand issuers. The purpose of this paper is to provide regulators with systematic evidence on firm specific characteristics associated with reporting delay. The paper examines the audit report lag (ARL), the financial report lag and the corresponding interim report lags for a large sample of New Zealand listed firms.Design/methodology/approachBecause of the small sample we report bivariate correlations. Together with OLS regression, we examine the association between reporting delay and firm characteristics (e.g., size, complexity, governance) that capture the supply and demand for timely audited financial reports. We choose a period immediately prior to the FMA enforcement of reporting delays to capture the voluntary choice of reporting timeliness by managers.FindingsThe audit lag (i.e. balance date to preliminary announcement to the NZX) is longer than the report lag (i.e. preliminary announcement date to the issuance of the report to the NZX). We find that audit risk factors (leverage and finance firms) and busy reporting period are associated with longer audit lag. Whereas, having a Big 4 auditor and an interim review reduces annual audit lag. Investor demand factors are associated with a shorter report lag. Firms with a loss and more segments have a shorter report lag, while firms with high market to book ratio have a longer report lag. These are consistent with agency and proprietary cost explanations. The interim report lag is only seven days shorter than the annual lag. The determinants of annual report lag provide weak explanations for the interim report lags.Research limitations/implicationsAlthough all listed companies are sampled, the small sample size reduces the power of the analysis and may limit finding significant results at conventional levels.Practical implicationsThe factors associated with reporting delays could be used by regulators as red flags to identify abnormal reporting delays. Interim reporting lags appear excessively relative to annual report lags. Therefore, regulators should investigate the reasons for the lack of timeliness of interim reports.Social implicationsReport timeliness is an important, but often overlooked, component of accounting quality. The major social implication is that timely reporting reduces information asymmetry between managers and shareholders and other stakeholders. Making better, timelier decisions ought to increase the wealth and welfare of investors and other stakeholders.Originality/valueThere are many studies on reporting delay. However, prior evidence on reporting delay in New Zealand is pre-IFRS and pre-recent regulatory reforms (such as the formation of the FMA). Hence, our contribution is to provide more contemporary-relevant evidence. We also distinguish between ARL and the financial report lag and found that different firm characteristics drive these lags. We also examine the interim reporting lag.

All My Rowdy Friends: The Effect of Super Bowl Hosting on Audit Timing

We use the Super Bowl as a setting to explore the impact of a non-financial, exogenous source of distraction on audit efficiency/timeliness. The magnitude of festivities related to hosting the Super Bowl, combined with the game falling during the audit “busy season,” results in an ideal setting to examine how audit firms navigate short-term, anticipated audit team capacity constraints. Using 16 years of financial reporting data, we test the impact of Super Bowl hosting and find it results in less efficient audits (approximately 2 days, in terms of audit report lag) and less timely SEC (10-K) filings. However, we find no impact of Super Bowl hosting on audit fees, earnings announcement timeliness, or audit quality (using four different proxies). Our study contributes to our understanding of the costs of Super Bowl hosting, provides empirical evidence that exogenous distraction reduces efficiency in a large organizational setting, underscores the importance of high quality human resource inputs to positive audit outcomes, and provides evidence that audit firms accept lower audit efficiency in response to short-term, anticipated capacity constraints

Audit Report Lag and Its Determinants

Audit report lag is an important issue because it can affect the timeliness of accounting information that is used by internal and external users for their decision making. This study aims to examine the influence of profitability, solvency, company size, and the reputation of public accounting firms on the audit report lag. We collected data from 40 Indonesian mining companies annual reports from 2013 to 2017. The hypotheses were tested by using multiple regression analysis. The results show that profitability and company size have significant negative impacts on audit report lag, but solvency and reputation public accounting firm have no effect. The results of this study can be taken into consideration for companies as well as possible so that they can submit financial reports in a timely manner.
 Keywords: profitability, solvency, company size, reputation public accounting firm, audit report lag

Audit Report Lag: Specialized Auditor and Corporate Governance

Objective - This paper aims to obtain empirical evidence about the influence of specialized auditors, audit tenure, audit committee, board independence, ownership concentration, and auditor quality on audit report lag in Indonesian manufacturing firms. Methodology/Technique – The population is all manufacturing companies listed on the Indonesia Stock Exchange between 2010 and 2016. Multiple linear regressions was used as the data analysis method. Finding - The results of this research show that specialized auditors, board independence, ownership concentration and auditor quality all have an influence on audit report lag. Meanwhile, audit tenure and audit committee do not have an influence on audit report lag. Novelty - Specialized auditors will provide better performance than non-specialized auditors. Specialized auditors will apply more appropriate planning and monitoring on the audit procedure. Specialized auditors need longer time to audit financial statements, which effects audit report lag. The presence of an independent board requires higher quality financial statements. Thus, the auditor needs to put more effort into the verification process of financial statements. The largest shareholders tend to be committed and responsible to the company’s reputation. Managers will demand the audit report lag in a timely manner, in order to maintain the trust and satisfaction of the company’s largest shareholders. Type of Paper: Empirical. Keywords: Audit Report Lag; Specialized Auditor; Board Independence; Ownership Concentration; Auditor Quality. Reference to this paper should be made as follows: Pradipta, A; Zalukhu, A.G. 2020. Audit Report Lag: Specialized Auditor and Corporate Governance, Global J. Bus. Soc. Sci. Review 8(1): 41 – 48. https://doi.org/10.35609/gjbssr.2020.8.1(5) JEL Classification: G30, M42.

Corporate Governance and Financial Ratios Effect on Audit Report Lag

Objective – the timeliness of financial statement submission becomes important in decision making. With the growing importance of timely financial statements for the relevance of decision making, an understanding of the determinants of audit report lag becomes necessary. This research intends to obtain empirical evidence that corporate governance through board and audit committee characteristics, specifically size, meetings, independence and expertise has an influence on audit report lag. Financial ratios through firm size, profitability and leverage are tested to determine their influence on audit report lag. Methodology/Technique – Hypothesis tests with multiple regression are used with non-financial firms listed on the Indonesian Stock Exchange between 2015 to 2017. This research uses purposive sampling with the result of 204 companies sampled and 612 data sets used in the model. Findings – The result of this research show that board size, board meetings, board independence, audit committee size, firm size and profitability all have an influence on audit report lag. Meanwhile, audit committee independence, audit committee expertise, and leverage have no influence on audit report lag. Type of Paper: Empirical Keywords: Board Characteristics; Audit Committee; Financial Ratio; Audit Report Lag. Reference to this paper should be made as follows: Firnanti, F; Karmudiandri, A; 2020. Corporate Governance and Financial Ratios Effect on Audit Report Lag, Acc. Fin. Review 5 (1): 15 – 21. https://doi.org/10.35609/afr.2020.5.1(2) JEL Classification: M40, M41, M49 _______________________________________________________________________________________

Pengaruh Likuiditas, Solvabilitas, Jenis Industri dan Auditor Switching Terhadap Audit Report Lag Perusahaan Indeks LQ45

Financial statement should provide high quality of information which is useful for stakeholder, especially investors to make investment decision. The important quality of a financial statement is timeliness. Otoritas Jasa Keuangan (OJK) has regulated that go public companies have to provide annual financial statement along with the audit report from public accountant that must be given to OJK not later than the end of third month after the financial year ends. Therefore, it is important for companies to pay attention in audit report lag. This research is focused on the effect of liquidity, solvability, type of industry and auditor switching toward audit report lag. This research is conducted at LQ45 Index Companies which are listed on Indonesia Stock Exchange in 2015 – 2018. The research method is causal study. The hypothesis is testing using panel data regression. This research founds that type of industry has a significant partial effect on audit report lag. Whereas, liquidity, solvability and auditor switching do not have significant partial effect on audit report lag. Furthermore, on simultaneous test, it is founded that liquidity, solvability, type of industry and auditor switching are simultaneously affecting audit report lag.

Firm Size, Profitability, Leverage as Determinants of Audit Report Lag: Evidence From Indonesia

This study examines the factors that influence Audit Report Lag in Indonesia. This factor is seen from the financial performance of the company size, profitability and corporate leverage. The research sample was 91 manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period of 2015 and 2016. The total observation for 2 years amounted to 182. The method of data analysis is random effect models. The results showed that company size and profitability are variables that can shorten Audit Report Lag. Meanwhile, leverage has not empirically proven to have a significant effect. The findings implies that large companies have better information and technology systems compared to smaller companies so as to strengthen internal control and speed of presentation of financial statements. High profitability encourages companies to present financial reports on time so that the impact of ARL decline.

Determinasi Audit Report Lag

This research aims to verify and provide empirical evidences about: The effect of Auditor Switching, Going Concern Opinion, Profit or Loss of current year and Company Size to the Audit Report Lag at companies LQ-45 that are listed on Indonesian Stock Exchange during the period 2011-2015.The population of this research are the LQ-45 companies listed in Indonesia Stock Exchange during the period 2011-2015. Sampling method using purposive sampling and obtain 15 companies. Data collection method used is the documentation. The analysis used is multiple linear regression analysis to test the hypothesis. The results shows that Auditor Switching and Opini Going Concern does not effect to Audit Report Lag partially, but Profit or Loss of current year and Company Size gave negative effect on Audit Report Lag partially. Auditor Switching, Opini Going Concern, Profit or Loss in year going and Company Size gave significant effect on Audit Report Lag simultaneously.

Salary Perception and Career Prospects in Audit Firms

We examine the role that auditor’s salary perception has on audit quality and delay. Using Glassdoor ratings by U.S. Big 6 audit firm employees in audit and assurance, we first document that there is discrepancy between pay perception and reality. The discrepancy is explained, though not completely, by salary level, comparisons to peers and superiors, firm-wide attitudes, cost of living and human capital in the area, work-life balance, and perceived career prospects. Surprisingly, the unexplained pay dissatisfaction relates positively with audit quality (small profits and going concern opinions) and audit efficiency (audit report lag), after controlling for salary level. Further tests show that an audit employee’s expectation of career opportunities moderates this result. Our findings contribute to a greater understanding of the audit employee-level factors that influence audit work outcomes.

KEMAMPUAN SPESIALISASI INDUSTRI AUDITOR MEMODERASI PENGARUH AUDIT TENURE DAN KUALITAS AUDIT SERTA PENGARUH RASIO KEUANGAN TERHADAP AUDIT REPORT LAG

Financial statements must be presented soon so it will not reduce its usefulness principles. This study aims to prove the effect of audit tenure and audit quality with auditor industry specialization as a moderating variable and also the effect of financial ratios to audit report lag. Research objects used mining sector companies listed on The Indonesia Stock Exchange for the period of 2016—2018 with an amount of 35 companies and a total of 105 observational data. The data analysis technique used descriptive statistic test, pooled data regression test, classic assumption test, multiple regression linear test, and hypothesis test using SPSS 20. The classic assumption test results show that the residual data is normally distributed, there is no symptom of heteroscedasticity, the regression model is free from multicollinearity, and there is no positive or negative autocorrelation. Based on this research, it can be concluded that there is sufficient evidence that solvability ratio has a positive effect on audit report lag, audit quality, and profitability ratio have negative effects on audit report lag. However, there is no sufficient evidence that audit tenure has a negative effect on audit report lag and auditor industry specialization doesn’t have the capability to moderate the effect of audit tenure and audit quality to audit report lag. 
 Keywords: audit report lag, audit tenure, audit quality, financial ratios, auditor industry specialization

Does the severity of a client’s negative environmental, social and governance reputation affect audit effort and audit quality?

In recent years, investors have begun to value companies’ reputations through their environmental, social, and governance (ESG) practices. ESG risk can affect business processes and controls and can heighten financial risk and threaten a firm’s survival. This study examines whether and how the severity of media coverage of a firm’s negative ESG issues (tainted ESG reputation) is associated with audit effort and audit quality. I find that auditors manage the higher expected engagement risk conveyed by tainted ESG reputation by applying higher audit effort. Next, I observe that the increased effort is associated with auditors likely detecting and requiring adjustments for material misstatements and that tainted ESG reputation is associated with fewer misstatements (i.e., reduces poor audit quality). The association between tainted ESG reputation and audit quality is driven primarily by increased audit report lag, not by increased audit fees. Further, I find that tainted ESG reputation is positively associated with audit effort and reduces poor audit quality for up to three years. The results also show that the audit effort and audit quality effect vary across the three components of ESG.

Audit committee ownership and audit report lag: evidence from Australia

PurposeThis paper aims to examine whether audit committee ownership affects audit report lag. Independent audit committees are responsible for overseeing the financial reporting process, to ensure that financial statements are both credible and released to external stakeholders in a timely manner. To date, however, the extent to which audit committee ownership strengthens or compromises member independence, and hence, influences audit report lag, has remained unexplored.Design/methodology/approachThis paper hypothesizes that audit committee ownership is associated with audit report lag. Further, the author hypothesize that both the financial reporting quality and the going concern opinions of a firm mediate the effect of audit committee ownership on audit report lag.FindingsUsing data from Australian listed companies, the author find that audit committee ownership increases audit report lag. The author further document that financial reporting quality and modified audit opinions rendered by external auditors mediate this positive relationship. The results are robust to endogeneity concerns emanating from firms’ deliberate decisions to grant shares to the audit committee members.Originality/valueThe study contributes to both the audit report timeliness and the corporate governance literatures, by documenting an adverse effect of audit committee ownership.

The extent of audit report lag and governance mechanisms

PurposeThe purpose of this study is to examine the extent of audit report lag and its association with governance mechanisms in the Islamic banking institutions in Malaysia.Design/methodology/approachThe extent of audit report lag is defined by the number of days from a company’s financial year-end to the signature date on its audit report. The sample of the study comprises 112 observations of Islamic banking institutions’ financial reports for the period 2008-2014. A balanced panel data analysis is performed to analyse the association between the extent of audit report lag and governance mechanisms.FindingsThe findings show that the extent of audit report lag for the sample selected ranges from a minimum period of 7 days to a maximum period of 161 days, and the extent of audit report lag is approximately two months on average. A fixed effects analysis indicates that audit committee expertise and audit committee meeting have significant association with the extent of audit report lag. On the other hand, board independence, audit committee size and Shari’ah board expertise have insignificant association with the extent of audit report lag. In addition, one control variable (Islamic bank size) is found to be significantly associated with longer audit report lag.Practical implicationsThe findings provide useful feedback for Malaysian policymakers on the past and current practices of financial reports and of governance mechanisms. The findings of the study would help the policymakers in monitoring the Islamic banking institutions’ compliance with financial reports submission requirements. The policymakers perhaps could relook into governance mechanisms that reduce the extent of audit report lag in the Islamic banking institutions and implement regulations to strengthen them.Originality/valueUnlike the majority of prior studies that investigated the association between the extent of audit report lag and governance mechanisms, this study provides two contributions. First, to the authors’ knowledge, this study is the first piece of research that examined the association between governance mechanisms and the extent of audit report lag in Islamic banking institutions. Second, the study examined the association of new governance variable, namely, Shari’ah committee expertise which has not been previously examined in the literature of audit report lag.