Audit Report Timeliness Research Articles

The Role of Audit Committee to Decrease Audit Report Lag

This study aims to investigate the role of the audit committee as a moderator in reducing audit report lag, with independent variables being audit complexity, board size, and board meetings' impact on audit report lag. The sample comprises 96 infrastructure sector companies listed on the Indonesia Stock Exchange for the years 2022-2023.The findings reveal that the audit complexity (ACX) variable does not significantly positively influence audit report lag, while the board size (BOS) variable does not significantly negatively affect audit report lag. However, the board meetings (BOM) variable shows a significant negative impact on audit report lag. Furthermore, the audit committee (ACOM) strengthens the influence of audit complexity (ACX) on audit report lag and also enhances the influence of board size (BOS) on audit report lag. However, the audit committee (ACOM) does not strengthen the influence of board meetings (BOM) on audit report lag. In summary, this study sheds light on the moderating role of the audit committee in reducing audit report lag, highlighting the varying effects of audit complexity, board size, and board meetings on audit report timeliness within the IDX infrastructure sector.

Determinants Impacting Audit Delays: The Case of Saudi Listed Firms

Objectives: We examined the determinants that influence the timeliness of audit reports. Methods: We used 532 observations that were collected over four years (2019 - 2022) from 133 Saudi listed firms, which were analysed using ordinary least squares (OLS) regression and relevant statistical tests (e.g. multicollinearity, autocorrelations, R-squared, adjusted R-squared, and F-value tests). Agency theory was used as a theoretical framework to gain insights about the results. Results: Audit firm size and auditee size were significant attributes that affected the timeliness of audit report lag (ARL) among financial and non-financial Saudi listed firms. Conclusion: This study provides useful insights into the determinants of ARL, as well as timely empirical evidence that complements existing literature in terms of relationships between an audit firm’s attributes and the timeliness of financial reporting.

Audit committee attributes and audit report timeliness of quoted manufacturing firms in Nigeria

The study examined the effect of audit committee attributes on audit report timeliness in quoted manufacturing firms in Nigeria. Other specific objectives were to: assess the effect of audit committee independence and audit committee size, on audit report timeliness in quoted manufacturing firms in Nigeria over the period of 2017-2022. This study adopted quantitative research design. The study selected four listed manufacturing firms in Lagos were Unilever Nigeria PLC, Nigeria Breweries PLC, UAC Foods PLC and Cadbury Nigeria PLC. The data analytical techniques were descriptive statistics, correlation analysis and Generalized Panel Ordinary Least Squares (GLS). The empirical result showed that audit committee independence has positive and significant impact on audit report timeliness in quoted manufacturing firms in Nigeria (t-statistic; 2.9267; P-value; 0.0043 < Sig-value; 0.05); audit committee size has positive and significant impact on audit report timeliness in quoted manufacturing firms in Nigeria (t-statistic; 2.9267; P-value; 0.0043 < Sig-value; 0.05). The study recommends that management of manufacturing firms should board should be on the bases of age and experience not on friendship since it positively relates to performance and to the probability of disciplinary management turnover in poorly performing manufacturing firms.

Do family ownership and supervisory board characteristics influence audit report lag? A view from a two-tier board context

This study investigates the impact of family ownership and supervisory board characteristics on audit report lag in Indonesia. The study relies on a balanced panel dataset and matched-pair sample of 124 listed non-financial firms (2017–2019) in a two-tier board context, drawing on Type II agency theory and the entrenchment/alignment implications of ownership concentration. First, we find a positive and significant association between family ownership and audit report lag. Second, we find evidence that the size of the supervisory board (locally referred to as the board of commissioners) and the frequency of meetings are negatively associated with audit report lag. Further analyses reveal that firms with a larger proportion of family members on the supervisory board experience longer reporting lag. This finding highlights the family’s entrenchment and their domination of the board of commissioners. Additional analysis considering the commissioners’ backgrounds reveals that audit report timeliness worsens when there is a larger proportion of community leadership. This suggests that some commissioner profiles could further lead to entrenchment behaviors. Our findings contribute to the literature and to policy by highlighting the potential and limits of a two-tier board policy on accounting outcomes, particularly in the context of dominant family structures in emerging economies.

Organizational resilience of audit firms – evidence from the outbreak of the COVID-19

PurposeThis paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created unanticipated barriers for auditors in Hong Kong. The authors expect that auditors with greater organizational resilience can respond to unexpected situations and restore expected performance levels relatively quickly.Design/methodology/approachThe authors utilize a sample of 1,008 companies listed on Hong Kong Stock Exchange (HKEX) with a financial year-end of December 31. The authors identify five proxies contributing to organizational resilience: auditor size, industry specialization, diversity, geographic proximity to the client and auditing a new client. The authors use audit report timeliness as this study's main dependent variable.FindingsThis study's full-sample results suggest that larger auditors, industry specialists and auditors with closer relationships to clients issued more timely audit reports during the pandemic. The analysis of a subsample of companies that initially published unaudited financial statements reveals that industry expertise and longer auditor-client relationships significantly reduced the need for year-end audit adjustments. Finally, the authors find that larger auditors were more likely to offload clients, whereas industry specialists were more likely to retain clients.Research limitations/implicationsThe results of the paper suggests that audit firm characteristics associated cognitive abilities, behavioral characteristics and contextual conditions are associated with audit firm organizational resilience and, consequently, helps auditors respond unexpected changes in the audit environment.Practical implicationsThe findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions.Originality/valueThis study is the first to link organizational resilience to the performance of audit firms in a time of unexpected events. The authors connect three auditor and two auditor-client dimensions to the organizational resilience of the audit firms.

Audit committee traits impact on audit report lag: Evidence from non-financial listed entities

This study examines the influence of audit committee traits on the timeliness of financial reporting by Saudi non-financially listed entities. So, the study analyzes 300 observations spanning three years from 2020 to 2022 for 100 non-financial entities. This study adopts different statistical models, such as ordinary least squares (OLS) regression, along with the fixed development model and random effects model, to promote the underlying regression results. Agency and resource dependency theories were employed as theoretical frameworks to gain insight into the research results and hypotheses. This study shows that audit committee financial expertise (ACFE), prior experience (ACPE), and independence (ACIND) strongly affect the audit report lag (ARL). The findings provide insights for regulatory authorities, current and potential investors, and moneylenders regarding the determinants of the timeliness of audit reports. It suggests that the current audit committee regulations, especially those with financial expertise, ACPE, and ACIND, are effective in enhancing the timeliness of financial reporting. Moreover, it provides timely empirical evidence for the existing literature related to the presence of a relationship between specific traits of the audit committee and financial reporting timeliness (Abernathy et al., 2017; Sultana et al., 2015).

KARAKTERISTIKE REVIZIJE I KVALITETA FINANCIJSKOG IZVJEŠTAVANJA MEĐU LISTANIM NEFINANCIJSKIM TVRTKAMA U NIGERIJI

This study is set up with the purpose of examining the effects of audit attributes on financial reporting quality of quoted Nigeria non-financial firms. The study also reviewed the moderating effect of external audit quality on the connection between internal audit characteristics and the quality of financial reporting (FRQ). Longitudinal panel research design was used in this study. The population of the study comprises of 112 non-financial firms quoted on the Nigeria Exchange Group (NGX). The study make use of secondary data obtained from 72 listed non-financial firms in Nigeria over the period covering 2013 - 2020. Analysis of the data collected for the study was done using panel regression, correlation analysis and descriptive statistics. The results revealed that AC meetings and AC gender diversity has significant positive impact on the FRQ report while AC independence and AC size have no significant influence. In addition, the study found significant moderating effect of audit report lag on the link between AC meeting and FRQ, as well as on the link between AC gender diversity and FRQ implying that audit report timeliness strengthens the positive and significant impact of AC meetings and gender diversity on FRQ. The study concluded that audit quality attributes are significant in improving the FRQ of the listed non-financial firms in Nigeria. Hence, the study recommends that regulators and decision makers of the firms should ensure higher female representation in the AC. Also, AC of the firms in Nigerian non-financial sector should be encouraged to meet regularly.

Hyperbole or reality? The effect of auditors' AI education on audit report timeliness

We manually collect data on auditors with artificial intelligence (AI) educational backgrounds comprising 8201 company-year observations of A-share listed companies in China between 2014 and 2020. We then develop an auditor individual-level setting to investigate the role of AI education in audit report timeliness. Results show auditors with AI educational backgrounds are negatively and significantly associated with audit report lag, indicating auditors with AI education can shorten annual audit report times by using programming, applied technology, and logical-thinking skills, thereby enhancing audit report timeliness. In addition, this timeliness effect is more pronounced in accounting firms with more branches and among state-owned enterprises, and higher-risk clients. Furthermore, AI education and Certified Public Accountant status can complementarily strengthen this effect, particularly in companies with higher client portfolio risk. Our results provide evidence that auditors with AI education play an important role in audit report timeliness reality and not hyperbole, which supports the efficiency view, and the understanding potential unintended consequences of auditors' AI education could be of interest to regulators that plan to develop new liberal arts framework.

A comparative study of the relationship between audit quality and earnings management in the markets of Iraq and Oman

The present study investigates the relationship between audit quality and earnings management in banks listed on the Stock Exchange of Iraq and Oman. This paper used audit firm size, auditors’ industry expertise, audit report timeliness, auditor change, and auditors’ opinions to measure audit quality. Financial statements, notes attached to financial statements, and reports of independent auditors of 28 banks listed on the Iraqi Stock Exchange and 8 banks listed on the Oman Stock Exchange during the financial period of 7 years (2015 to 2021), and hypotheses were tested using EViews software and panel data. The results of the hypothesis testing showed no significant relationship between the firm size and the auditors’ change and earnings management for both countries (Iraq and Oman). This is while the relationship between the auditor’s industry expertise, the timely presentation of the audit report, and the auditor’s opinion and earnings management for both countries (Iraq and Oman) is negative.

FINANCIAL REPORTING TIMELINESS: A SCOPE REVIEW OF CURRENT LITERATURE

Purpose- A key factor in ensuring that stakeholders can make well-informed decisions based on accurate and up-to-date information is financial reporting timeliness. This involves the timely release of financial statements, which are essential for providing investors, creditors, and other stakeholders with an overview of a company's financial status. Timely financial reporting allows stakeholders to react quickly to changes in a company's financial situation and make informed investment decisions. It also helps to build trust and confidence in a company's management and financial reporting processes, ultimately leading to greater transparency and accountability. This study aims to provide a scope review of current literature on financial reporting timeliness by analyzing the number of publications on this topic in Web of Science. Methodology- A systematic search of academic databases and search engines was conducted using keywords such as "financial reporting timeliness," "audit report lag" and "audit report delay". Findings- We found that there are more than 150 publications on the topicality of financial reporting on the Web of Science alone from 2012-2023. Over the past few years, there has been a steady and consistent increase in the number of publications dedicated to exploring the topic of financial reporting timeliness, specifically focusing on the audit report lag. Conclusion- The review highlights key themes, including factors contributing to audit report delays, the impact of audit report delays on financial reporting timeliness, and potential solutions for improving audit report timeliness. The findings reveal that audit report delays can have significant consequences for financial reporting timeliness, and consequently, for stakeholders' decision-making processes. This scope review underscores the importance of addressing audit report delays to maintain timely financial reporting and proposes future research directions for further exploration. Keywords: Financial reporting timeliness, audit report lag, auidt report delay, scope review JEL Codes: M40, M41, M42

An Empirical Research on Audit Report Timeliness

Timeliness is an accounting principle that reflects economic value and relevance. Time­liness in releasing financial statements can provide relevant information and can influence decisions. This empirical study aims to examine the effect of company and audit characteristics on the timeliness of audit reports. This study uses a panel regression analysis methodology on 115 Indonesian companies listed on the Indonesia Stock Exchange from 2017-2021. This study concludes that company characteristics have a significant effect on the timeliness of audit reports. Based on the results of empirical testing, larger audit complexity, firm size, and debt-equity lead to shorter audit delays, on the other hand, negative profits and ownership concentration cause longer delays. The implications lead to more timely reporting and an appropriate decision-making process.

Audit Report Timeliness Before and During the COVID-19 Pandemic: Evidence from the Market Reaction

ABSTRACT This study investigates the market response to the timeliness of audit reports, specifically before and during the coronavirus disease 2020 (COVID-19) pandemic. We use the earnings response coefficient (ERC) as our proxy to assess the market reaction to the timeliness of audit reports. We applied the purposive sampling method to all companies listed on the Indonesia Stock Exchange (IDX), except for the financial industry, and obtained 977 firm-year observations as our final sample. Using linear multiple regression models in our analysis, we discovered no indication of a market response to the timeliness of audit reports for our full sample during 2018–2020. However, we find evidence that during the COVID-19 pandemic in 2020, the market reacted more positively to the audit report timeliness compared to the pre-COVID-19-pandemic period. Our results indicate that investors were more tolerant of delayed audit reports during the COVID-19 pandemic due to the increased audit efforts and longer time needed to gather sufficient evidence to issue audit reports.

Tournament incentives and audit report lag: Further evidence

Organizations design their executive compensation such that there is a significant variance between the remuneration of the chief executive officer (CEO) and senior executives directly below them. This introduces a tournament among the top executives to determine who among them is best suited to succeed the current CEO. The tournament incentivizes the top executives to engage in behaviors that will enhance their chances of being champions in the tournament and consequently succeeding the current CEO of the organization. We research the impact of tournament incentives on financial information accuracy and timeliness. Specifically, we analyze the disparity between the remunerations of CEOs and other top five senior executives. We use the audit report lag as a proxy for financial information timeliness. After analyzing a total of 2,213 firm-year observations spanning from 2010 to 2018, we conclude that auditors’ perception plays a significant role in how tournament incentives relate to the timeliness of audit reports. We show that auditors may inadvertently discount the behaviors of senior executives involved in tournaments. We also show that senior executives involved in tournaments may engage in misbehavior through accruals earnings management. They may also engage in collaboration and positive effort. We find that audit report lag relates negatively to both tournament incentives and financial analyst following. Financial analysts following mediate the association between audit report lag and tournament incentives. Yet, audit report lag relates positively to accrual earnings management. Our results indicate that executive behavior, conditional on tournament incentives, significantly influences audit report lag. They further suggest that the financial analysts’ monitoring effect continues to work even in tournament situations. For the robustness test and to allay endogeneity concerns in our model, we perform a 2SLS test.

DENETİM RAPOR ZAMANLILIĞI: TÜRKİYE ÖRNEĞİ

Audit report timeliness is not an area that has never been studied before in the academic literature. Although there are very few academic studies on the subject in the national literature, there are some studies in the international literature. This study contributes to the literature in two aspects. First, unlike previous studies, key audit matters were included in the analysis as an independent variable that could affect audit report timeliness. Second, in this study, unlike previous studies, an analysis was carried out by using non-parametric statistical methods instead of regression analysis used in other studies. To the best knowledge, there is no study in the literature that has these features.

MODERATING EFFECT OF AUDIT LIBERTY ON REPORTING TIMELINESS OF NON-BANK FINANCIAL FIRMS IN NIGERIA

This study examined the impact of auditors' liberty on the timely submission of audit reports by financial institutions in Nigeria (2011-2020). For the study, two research hypotheses were developed, and tested based on the purview of ex-post facto research design. All financial firms quoted and trading on the Nigerian Exchange Group (NGX) as of December 31, 2021, were included in the study's population. Twenty-three (23) financial firms were chosen as a sample. The Nigerian Exchange Group (NGX) website and the annual reports provided by the sampled companies themselves served as the study's primary secondary sources of data. The hypotheses were validated using random effect least squares regression. The study found that audit fees have a significant negative impact on timely submission of audit reports, but that the gender diversity of the audit committee had no mitigating influence on this relationship. In light of the findings, the report suggests, among other things, that businesses hire audit firms with more experience who will prioritize professionalism and due diligence over any pressure brought on by large or low fees. In order to avoid spending more than is necessary without sacrificing audit quality and timely reporting, the study also advised organizations to budget an ideal amount for audit expenses. Other research can be done on additional particular elements that influence audit report latency in manufacturing firms and the oil and gas industry.
 Keywords: Audit Liberty, Audit Fee, Audit Committee Gender Diversity, Audit Report Timeliness.

Effects of Timeliness of Audit Reports on the Financial Stability of Matatu SACCOS in Uasin Gishu County, Kenya

The Matatu SACCO sub sector in Kenya is not well developed and is characterized by very short life span, sub- divisions into small uneconomical units, with low capital base and poor services, limiting their financial stability. Though having an audit function is important, the quality of the reports from the function is of utmost importance. The purpose of this study is to examine the effects of timeliness of audit reports on the financial stability of matatu saccos in uasin gishu county, Kenya. The study was guided by agency theory and employed Ex post facto research design. A total of 60 Matatu SACCOs have been registered in the county. The target population of this study was all 41 active matatu Sacco’s since the others have since gone dormant. Out of 41 active Matatu Sacco’s in the county, 36 SACCOs were selected for sampling using Krejcie and Morgan table. Both primary and secondary data was collected by use of questionnaire and document analysis guide. Primary data utilized the questionnaire while secondary data utilized document analysis guide. Analysis of data was done using descriptive and inferential statistics. Descriptive statistics such as means, percentages and frequency were applied while inferential statistics like multiple regression analysis were used. All tests were done at 5% significance level. Regression results were as follows: Timeliness had (β =0.507, p=0.000). The study concluded that timeliness of audit reports contributes positively to financial stability of Matatu SACCOs. The study recommended that the management of Matatu SACCOs’ should always ensure that there is timeliness of audit reports. Keywords: timeless, audit, matatu saccos, financial stability, effects DOI: 10.7176/RJFA/13-16-02 Publication date: August 31 st 2022

Tax Aggressiveness and Audit Report Timeliness: The Role of Ownership Structure and Audit Committee

Companies that engage in tax aggressiveness (TAG) are considered socially irresponsible and problematic from the perspective of tax authorities. This study examines the impact of TAG on audit report timeliness and the role of corporate governance using ownership structure and audit committee on the relationship between TAG and audit report timeliness. We use the tax planning prediction model to uncover TAG. The data for our sample is obtained from the manufacturing companies listed on the Indonesia Stock Exchange and was obtained using the purposive sampling method. Using multiple linear regression analysis, we discover a positive relationship between TAG and audit report timeliness. However, we also find that corporate governance mechanisms affect this positive relationship through ownership structure and audit committee competence. Our findings suggest that the delay of independent auditors due to audit processes may expose the activities of TAG’s clients, which may have economic consequences for tax authorities, companies, and other stakeholders.

The Impact of Financial Distress on the Relationship between Managerial Ability and Audit Report Timeliness Evidence from Companies Listed on the Egyptian Stock Exchange

The Impact of Financial Distress on the Relationship between Managerial Ability and Audit Report Timeliness Evidence from Companies Listed on the Egyptian Stock Exchange

The Effect of Audit Committee’s Characteristics on the Audit Report Timeliness: Empirical Evidence from the Uk

The Effect of Audit Committee’s Characteristics on the Audit Report Timeliness: Empirical Evidence from the Uk

A study on audit report timeliness: The Macedonian Stock Exchange

Abstract Financial statements reflect important information about the entity's financial position, operating performance, and cash flows and must be made available in a timely fashion to all interested factions to stimulate opportune business judgments. Ergo, this paper examines the association of the audited annual report delay with eight entity and audit firm attributes. The sample includes 396 observations of 99 nonfinancial firms listed on the Macedonian Stock Exchange (MSE) for the period 2014–2017. The regression results designate a statistically significant relationship between the audit opinion, company liquidity, size, and industry with the audit opinion lag. Moreover, the publication period ranges from 43 days to 374 days suggesting that timeliness may be a significant concern for Macedonian entities regarding financial reporting policy. This is the first study to thoroughly assess the relationship between entity, auditor characteristics, and audit report timeliness on the developing Macedonian market.