An Empirical Research on Audit Report Timeliness

Authors

  • Hendi Hendi Accounting Department, Universitas Internasional Batam
  • Riksen Sitorus Universitas Internasional Batam

DOI:

https://doi.org/10.9744/jak.25.1.39-53

Keywords:

Timeliness, audit report, determinant

Abstract

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.

References

Abdillah, M. R., Mardijuwono, A. W., & Habi-burrochman, H. (2019). The effect of company characteristics and auditor characteristics to audit report lag. Asian Journal of Accounting Research, 4(1), 129–144.Ohttps://doi.org/10.1108/AJAR-05-2019 -0042

Abernathy, J. L., Barnes, M., Stefaniak, C., & Weisbarth, A. (2016). An international perspective on audit report lag: A synthesis of the literature and opportunities for future rese¬arch. International Journal of Auditing, 21(1), 100–127. https://doi.org/10.1111/ijau.12083

Al-Ebel, A., Baatwah, S., & Al-Musali, M. (2020). Religiosity, accounting expertise, and audit report lag: Empirical evidence from the individual level. Cogent Business and Management, 7(1), 1–30. https://doi.org/10.1080/23311975.2020.1823587

Alfraih, M. M. (2016). Corporate governance mechanisms and audit delay in a joint audit regulation. Journal of Financial Regulation and Compliance, 24(3), 292–316. https://doi.org/10.1108/JFRC-09-2015-0054

Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2016). Auditing and assurance services (16th ed.). Pearson.

Arifuddin, Hanafi, K., & Usman, A. (2017). Company size, profitability, and auditor opinion influence to audit report lag on registered manufacturing company in Indonesia stock exchange. International Journal of Applied Business and Economic Research, 15(19), 353–367.

Aslam, S., Makki, M. A. M., & Iqbal, S. M. J. (2017). Driving forces behind audit report lag: A comparison between auditor independence and knowledge spillovers. A Research Journal of Commerce, Economics, and Social Sciences, 11(2), 151–157. https://doi.org/10.24312/paradigms110204

Baatwah, S. R., Al-Ebel, A. M., & Amrah, M. R. (2019). Is the type of outsourced internal audit function provider associated with audit efficiency? Empirical evidence from Oman. International Journal of Auditing, 23(3), 424–443. https://doi.org /10.1111/ijau.12170

Baatwah, S. R., Salleh, Z., & Stewart, J. (2018). Audit committee chair accounting expertise and audit report timeliness: The moderating effect of chair characteristics. Asian Review of Accounting, 27(2), 273–306. https://doi.org/10.1108/ARA-12-2017-0190

Baldacchino, P. J., Grech, L., Farrugia, K., & Tabone, N. (2016). An analysis of audit report lags in Maltese companies. Contemporary Studies in Economic and Financial Analysis, 98, 161–182. https://doi.org/10.1108/S1569-3759201600 00098010

Bhuiyan, M. B. U., & D’Costa, M. (2020). Audit committee ownership and audit report lag: Evi-dence from Australia. International Journal of Accounting and Information Management, 28(1), 96–125. https://doi.org/10.1108/IJAIM-0920180107

Bryan, D. B., & Mason, T. W. (2020). Earnings volatility and audit report lag. Advances in Accounting, 51, 100496. https://doi.org/10. 1016/j.adiac.2020.10046

Chan, K. H., Luo, V. W., & Mo, P. L. L. (2016). Determinants and implications of long audit reporting lags: Evidence from China. Accounting and Business Research, 46(2), 145–166. https://doi.org/10.1080/00014788.2015.1039475

Chandra, B., & Kellin. (2020). Analisis pengaruh karakteristik komite audit terhadap keter-lambatan audit pada perusahaan yang terdaftar di bursa efek Indonesia. Journal of Applied Managerial Accounting, 4(2), 186–207. https://doi.org/10.30871/jama.v4i2.2006

Choi, J., & Park, H. J. (2021). Business strategy and audit efforts-Focusing on audit report lags : An empirical study in Korea. Journal of Asian Finance, Economics and Business, 8(7), 525–532. https://doi.org/10.13106/jafeb.2021.vol8.no7.0525

Cullinan, C., & Zheng, X. (2017). Accounting outsourcing and audit lag. Managerial Auditing Journal, 32(3). https://doi.org/10/1108/MAJ-03-2016-1349

Dong, B., Robinson, D., & Xu, L. (Emily). (2018). Auditorclient geographic proximi- ty and audit report timeliness. Advances in Accounting, 40(December), 11–19. https://doi.org/10.1016/j.adiac.2017.12.001

Durand, G. (2018). The determinants of audit report lag: A meta-analysis. Managerial Auditing Journal, 34(1), 1–5. https://doi.org/10.1108/ MAJ-06-2017-1572

Fujianti, L., & Satria, I. (2020). Firm size, profitability, leverage as determinants of audit report lag: Evidence from Indonesia. International Journal of Financial Research, 11(2), 61–67. https://doi.org/10.5430/ijfr.v11n2p61

Ghafran, C., & Yasmin, S. (2017). Audit committee chair and financial reporting timeliness: A focus on financial, experiential and monitoring expertise. International Journal of Auditing, 22(1), 13–24. https://doi.org/10.1111/ijau.12101

Habib, A., Bhuiyan, M. B. U., Huang, H. J., & Miah, M. S. (2018). Determinants of audit report lag: A meta-analysis. International Journal of Auditing, 23(1), 20–44. https://doi.org/10. 1111/ijau.12136

Habib, A., & Huang, H. J. (2019). Abnormally long audit report lags and future stock price crash risk: evidence from China. International Journal of Managerial Finance, 15(4), 611–635. https://doi.org/10.1108/IJMF-07-20180213

Habib, A., & Muhammadi, A. H. (2018). Politi¬cal connections and audit report lag: Indonesian evidence. International Journal of Accounting & Information Management, 19(3), 120–124.

Handoyo, S., & Maulana, E. D. (2019). Determinants of audit report lag of financial statements in banking sector. Matrik : Jurnal Manajemen, Strategi Bisnis Dan Kewirausahaan, 13(2), 142–152. https://doi.org/10.24843/matrik:jmbk.2019.v13.i02.p02

Hassan, Y. M. (2016). Determinants of audit report lag: Evidence from Palestine. Journal of Accounting in Emerging Economies, 6(1), 13–32. https://doi.org/10.1108/JAEE-05-2013-0024

Hsu, H. T., & Khan, S. (2019). Chief accounting officers and audit efficiency. Asian Review of Accounting, 27(4), 614–638. https://doi.org/10.1108/ARA-09-2018-0171

IMF. (2022). Staff report for the 2022 article IV consultation (Issue 22).

Kaaroud, M. A., Mohd Ariffin, N., & Ahmad, M. (2020). The extent of audit report lag and governance mechanisms: Evidence from islamic banking institutions in Malaysia. Journal of Islamic Accounting and Business Research, 11(1), 70–89. https://doi.org/10.1108/JIABR-05-2017-0069

Khoufi, N., & Khoufi, W. (2018). An empirical examination of the determinants of audit report delay in France. Managerial Auditing Journal, 33(8/9), 700–714. https://doi.org/10.1108/MAJ-02-2017-1518

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2017). Intermediate accounting: IFRS 3rd edition (3rd ed.). Wiley.

Krisyadi, R., & Noviyanti. (2022). Analisis faktor-faktor yang mempengaruhi keterlambatan laporan audit. Owner: Riset & Jurnal Akuntansi, 6(1), 147–159. https://doi.org/10.33395/owner.v6i1.541

Lai, K. W. (2019). Audit report lag, audit fees, and audit quality following an audit firm merger: Evidence from Hong Kong. Journal of International Accounting, Auditing and Taxan, 36, 100271. https://doi.org/10.1016/j.intac-caudtax.209.100271

Lai, T. T. T., Tran, M. D., Hoang, V. T., & Nguyen, T. H. L. (2020). Determinants influencing audit delay: The case of Vietnam. Accounting, 6, 851–858. https://doi.org/10.5267/j.ac.2020.5. 009

Luo, Y., & Salterio, S. E. (2021). Toward an archival measure of the likelihood of auditor–Client management negotiation: An exploration of the audit lag measures conjecture*. Accounting Perspectives, 20(1), 109–143. https://doi.org/10.1111/1911-3838.12237

Machmuddah, Z., Iriani, A. F., & St. Utomo, D. (2020). Influencing factors of audit report lag: Evidence from Indonesia. Academic Journal of Interdisciplinary Studies, 9(6), 148–156. https://doi.org/10.36941/AJIS-2020-0119

Mathuva, D. M., Tauringana, V., & Owino, F. J. O. (2019). Corporate governance and the timeliness of audited financial statements: The case of Kenyan listed firms. Journal of Accounting in Emerging Economies, 9(4), 473–501. https://doi.org/10.1108/JAEE-05-2018-0053

Meckfessel, M. D., & Sellers, D. (2017). The impact of Big 4 consulting on audit reporting lag and restatements. In Managerial Auditing Journal (Vol. 32, Issue 1). https://doi.org/10.1108/MAJ-02-2016-1321

Ocak, M., & Özden, E. A. (2018). Signing auditor-specific characteristics and audit report lag: A research from Turkey. Journal of Applied Business Research, 34(2), 277–294. https://doi.org/10.19030/jabr.v34i2.10129

Peraturan otoritas jasa keuangan No. 44/POJK.04/2016 tentang laporan lembaga penyimpanan dan penyelesaian, 12 (2016).

Oradi, J. (2021). CEO succession origin, audit report lag, and audit fees: Evidence from Iran. Journal of International Accounting, Auditing and Taxation, 100414. https://doi.org/10.1016/ j.intaccau-dtax.2021.100414

Oussii, A. A., & Taktak, N. B. (2018). Audit report timeliness: Does internal audit function coordination with external auditors matter? Empirical evidence from Tunisia. EuroMed Journal of Business, 13(1),60–74. https://doi.org/10.1108/EMJB -10-2016-0026

Raweh, N. A. M., Abdullah, A. A. H., Kamar¬din, H., & Malek, M. (2021). Industry expertise on audit committee and audit report timeliness. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1920113

Rusmin, R., & Evans, J. (2017). Audit quality and audit report lag: Case of Indonesian listed companies. Asian Review of Accounting, 25(2), 191–210. https://doi.org/10.1108/ARA-06-2015-0062

Sakka, I. F., & Jarboui, A. (2016). Audit reports timeliness: Empirical evidence from Tunisia. Cogent Business and Management, 3(1). https://doi.org/10.1080/23311975.2016.1195680

Salehi, M., Lari Dasht Bayaz, M., Moham¬madi, S., Adibian, M. S., & Fahimifard, S. H. (2020). Auditors’ response to readability of financial statement notes. Asian Review of Accounting, 28(3), 463–480. https://doi.org/10.1108/ARA-03-2019-0066

Salehi, M., Lari Dasht Bayaz, M., & Naemi, M. (2018). The effect of CEO tenure and specialization on timely audit reports of Iranian listed companies. Management Decision, 56(2), 311–328. https://doi.org/10.1108/MD-10-2017-1018

Samaha, K., & Khlif, H. (2017). Audit-related attributes, regulatory reforms and timely disclo-sure. Journal of Financial Reporting and Accounting, 15(2), 158–179. https://doi.org/10.1108/jfra-08-2015-0077

Serly. (2021). Tata kelola perusahaan dan audit report lag pada perusahaan financial yang terdaftar di bursa efek Indonesia. Owner, 5(2), 631–643. https://doi.org/10.33395/owner.v5i2.498

Sharma, D. S., Tanyi, P. N., & Litt, B. A. (2017). Costs of mandatory periodic audit partner rotation: Evidence from audit fees and audit timeliness. Auditing, 36(1), 129–149. https://doi.org/10.2308/ajpt-51515

Shin, I. H., Lee, H. Y., Lee, H. A., & Son, M. (2017). How does human resource investment in internal control affect audit reporting lag? Asia-Pacific Journal of Accounting and Economics, 24(1–2), 195–215. https://doi.org/10.1080/ 16081625.201 5.1135751

Shofiyah, L., & Suryani, A. W. (2020). Audit report lag and its determinants. KnE Social Sciences, 202–221. https://doi.org/10.18502/kss.v4i7.6853

Srbinoska, D. S., & Srbinoski, I. (2021). A study on audit report timeliness: The Macedonian stock exchange. International Journal of Management and Economics, 57(3), 234–254. https://doi.org/10.2478/ijme-2021-0015

Stewart, E. G., & Cairney, T. D. (2019). Audit report lag and client industry homogeneity. Managerial Auditing Journal, 34(8), 1008–1028. https://doi.org/10.1108/MAJ-07-2018-1931

Suryanto, T. (2016). Audit delay and its implication for fraudulent financial reporting: A study of companies listed in the Indonesian stock exchange. European Research Studies Journal, 19(1), 18–31. https://doi.org/10.35808/ersj/503

Sutopo, B., Sutaryo, & Christian, Y. (2017). Empirical study of the determinants on audit reporting timeliness: Evidence from Indonesia. International Journal of Trade and Global Markets, 10(4), 303–313. https://doi.org/10.1504/IJTGM.2017.090272

Tanujaya, K., & Reny. (2022). Pengaruh karakteristik perusahaan dan komite audit terhadap audit report lag. Fair Value: Jurnal Ilmiah Akuntansi Dan Keuangan, 4(3), 1375–1393.

Wareza, M. (2021). Bandel! Telat lapkeu september 2020, 23 emiten didenda BEI. https://www.cnbcindonesia.com/market/20210113091734-17-215509/bandel-telat-lapkeu-september-2020-23-emiten-didenda-bei

Downloads

Published

2023-05-02

Issue

Vol. 25 No. 1 (2023): MAY 2023

Section

Articles

License

Authors who publish with this journal agree to the following terms:

  1. Authors retain the copyright and publishing right, and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) followingthe publication of the article, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).<a href="http://creativecommons.org/lice