The determinants of audit report lag: Evidence from Indonesia

Abstract

The determining factors that cause delays in audit reports are essential for shareholders to pay attention to when making quick decisions. Delays in audit reports receive significant attention in the capital markets where audited financial statements in annual reports are the only reliable source of information available to investors. This study aims to identify factors that cause delays in audit reports in the form of company and industry specifics consisting of profitability, company size, audit committee, audit opinion, and size of a public accounting firm. The research method uses a panel data regression model to test five hypotheses based on data collected from annual reports from 2011 to 2021. The research sample selected were 46 companies in the construction and property services sector listed on the Indonesian Sharia Stock Index. Empirical findings show that a public accounting firm’s profitability, audit opinion, and size hurt audit report lag, while the audit committee has a positive impact. Company size is the only factor that does not have an impact on audit reporting delays. The research results provide recommendations for company management and shareholders that delays in audit reports can be reduced by increasing company profits. Apart from that, audit delay lag can also be reduced by appointing a reputable or international public accounting firm and providing a quality audit opinion.

Analisis Faktor-faktor yang Mempengaruhi Keterlambatan Proses Audit: Studi Kasus tentang Besar Perusahaan, Profitabilitas, Kecukupan Modal, dan Opini Audit

“…Auditor mungkin perlu melakukan lebih banyak penelitian dan verifikasi untuk menyelesaikan temuan yang ditemukan selama audit, yang dapat memperpanjang audit delay (Djoko & Yanti, 2019). Kompleksitas audit dan tingkat keyakinan auditor terhadap pernyataan keuangan juga dapat mempengaruhi keterkaitan antara opini audit dan audit delay (Endri et al, 2023). Auditor mungkin memerlukan waktu tambahan untuk mengaudit perusahaan dengan tingkat kompleksitas yang tinggi atau ketidakpastian yang tinggi, terlepas dari opini audit yang diberikan.…”