Do Audit Report Disclosures Lead to Increased Liability Exposure? An Investigation of Jurorss Consideration of Auditorss Disclosure of Significant Deficiencies in Internal Control

PurposeAlthough a substantial body of literature investigates the determinants of audit report lag (ARL), scant empirical evidence exists on the consequences of ARL. The purpose of this paper is to examine the association between abnormally long ARL and future stock price crash risk.Design/methodology/approachThis quantitative study employed a large scale (14,445 firm-year observations) of annual financials, audit and ownership information for the Chinese listed companies during 2002–2013 which were retrieved from the China Stock Market and Accounting Research database.FindingsThis study finds evidence that abnormally long ARL increases the risk of a future stock price crash. Furthermore, the study finds that this adverse consequence is more pronounced for firms with a poor internal control environment.Practical implicationsRecently literature started to explore the consequences of abnormal ARL such as going concern audit opinion and restatements in the subsequent periods. This paper reveals that abnormal ARL has consequences for investor wealth losses as well. This is relevant in China, where the ongoing economic growth has attracted, and will continue to attract, a growing body of domestic and international investors. Understanding what factors could expose investors to wealth losses is of paramount importance for allocating their scarce capital.Originality/valueThis study extends the scant literature on the consequences of ARL, and provides useful insights for the Chinese regulatory authorities when considering the appropriateness of the current filing deadline for listed firms.

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PEMERINTAH KABUPATEN MUSI RAWAS PROVINSI SUMATERA SELATAN BERDASARKAN HASIL PEMERIKSAAN BPK-RI ATAS LAPORAN KEUANGAN PEMERINTAH DAERAH TAHUN 2015

Jurnal Riset Akuntansi dan Keuangan ◽

10.17509/jrak.v4i1.7709 ◽

2016 ◽

Vol 4 (1) ◽

pp. 885

Author(s):

Tevi Leviany

Keyword(s):

Control System ◽

Local Government ◽

Internal Control ◽

Financial Statement ◽

Regional Government ◽

Audit Report ◽

Financial Reports ◽

Financial Accountability ◽

Internal Control System ◽

Audit Reports

Abstract. The Audit Board of The Republic Indonesia in implementing audit on Local Government Financial Reports to assess the accountability of regional financial not only gave assessment on the qualification of audit report in forms of auditors’ opinion but also inside the audit of Local Government Financial Reports. The auditors also assess the effectiveness of internal control system which applied in regional government and compliance towards the laws. The problem was the weakness of financial accountability that occurred in government of Kabupaten Musi Rawas Provinsi Sumatera Selatan year 2015 acquired Qualified Opinion. The purpose of this research was to do deeper analysis towards Audit Reports on Regional Government Financial Statement of Kabupaten Musi Rawas by using content analysis to get complete description of Regional Government Financial Statement Accountability condition in Kabupaten Musi Rawas, especially observed from the effectiveness of internal control system. According to the result of analysis, it was concluded that the problem of effectiveness of government internal control of Kabupaten Musi Rawas was most found related with the weakness of Control Environment , Risk Assessment and Monitoring.Keywords: Financial Accountability; Audit Report; Internal Control System Abstrak. BPK – RI dalam pelaksanaan audit atas LKPD (Laporan Keuangan Pemerintah Daerah) untuk menilai akuntabilitas keuangan daerah tidak hanya melalukan penilaian atas kewajaran laporan keuangan dalambentuk pernyataan opini auditor saja, namun lebih dari itu dalam kerangka audit LKPD tersebut, auditor juga melakukan penilaian atas efektivitas sistem pengendalian intern yang diterapkan pemerintah daerah tersebut serta kepatuhannya terhadap peraturan perundangan yang berlaku. Permasalahan lemahnya akuntabilitas keuangan juga terjadi pada pemerintah kabupaten Musi Rawas Provinsi Sumatera Selatan yang untuk tahun 2015 memperoleh Wajar dengan Pengecualian (Qualified Opinion). Tulisan ini bermaksud melakukan kajian yang lebih mendalam terhadap Laporan Hasil Pemeriksaan (LHP) atas Laporan Keuangan Pemerintahan Daerah Kabupaten Musi Rawas dengan menggunakan analisis isi untuk memperoleh gambaran yang lebih lengkap mengenai kondisi akuntabilitas keuangan pemerintah Kabupaten Musi Rawas, khususnya dilihat dari sisi efektivitas sistem pengendalian intern. Berdasarkan hasil analisis disimpulkan bahwa permasalahan efektivitas sistem pengendalian intern pemerintah kabupaten Musi Rawas paling banyak dijukmpai terkait kelemahan komponen Lingkungan Pengendalian serta pada komponen Penilaian Resiko dan Pemantauan. Hasil uji F Statistik sebesar 135,06 menunjukan bahwa secara keseluruhan perencanaan pajak berpengaruh terhadap nilai perusahaan, sehingga hipotesis awal Ho penelitian ini.Kata Kunci: Akuntabilitas Keuangan; Hasil Pemeriksaan; Sistem Pengendalian Intern.

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Internal Control Reporting and Audit Report Lags: Further Evidence

Auditing A Journal of Practice & Theory ◽

10.2308/ajpt-50190 ◽

2012 ◽

Vol 31 (3) ◽

pp. 203-218 ◽

Cited By ~ 43

Author(s):

Vishal Munsif ◽

K Raghunandan ◽

Dasaratha V. Rama

Keyword(s):

Internal Control ◽

Significant Decline ◽

Control Problems ◽

Section 404 ◽

Audit Report ◽

Material Weaknesses ◽

Significant Interest ◽

Using Data ◽

Jobs Act ◽

The Impact

SUMMARY Internal control reporting continues to be of significant interest to regulators and legislators, as evidenced by the internal control-related requirements of the Dodd-Frank Act (2010) and the JOBS Act (2012) to exempt smaller firms from the requirements of Section 404. We extend prior research on the association between internal control weaknesses and audit report lag by (1) using data from 2008 and 2009, (2) comparing accelerated and non-accelerated filers, and (3) examining the impact of remediation of previously disclosed internal control problems. We find that (1) in 2008, the increase in audit report lag in the presence of material weaknesses in internal control is lower for non-accelerated filers as compared to accelerated filers, and (2) while the effect of a material internal control weakness on audit report lag is significantly lower in 2009 than in 2008 for accelerated filers, there is no such change for non-accelerated filers. We also find that for firms remediating previously disclosed internal control problems, there is a significant decline in audit report lag; yet, the remediating firms continue to have higher reporting lags than firms that had clean Section 404 opinions in both years. We also find that, at least with respect to the effect of internal control problems on audit report lag, the “small accelerated filers” (defined as those with market capitalization less than $250 million) are treated by the auditors as being (1) substantively similar to other accelerated filers, and (2) quite distinct from non-accelerated filers.

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The Effect of the SEC's XBRL Mandate on Audit Report Lags

Accounting Horizons ◽

10.2308/acch-51823 ◽

2017 ◽

Vol 32 (1) ◽

pp. 1-27 ◽

Cited By ~ 9

Author(s):

Keval Amin ◽

John Daniel Eshleman ◽

Cecilia (Qian) Feng

Keyword(s):

Internal Control ◽

Reporting Quality ◽

Audit Fees ◽

Economic Consequences ◽

Data Availability ◽

Audit Report ◽

Difference In Differences ◽

Financial Report ◽

Business Reporting ◽

Mandatory Adoption

SYNOPSIS: There is considerable debate about whether the adoption of eXtensible Business Reporting Language (XBRL) will result in timelier SEC filings. We provide empirical evidence on this debate by investigating the effect of XBRL adoption on audit report lags. Using a hand-collected panel of S&P 1500 clients' XBRL financial report filings and both levels and difference-in-differences analyses, we show that audit report lags decrease following the mandatory adoption of XBRL. These results are robust to various subsamples and model specifications. On average, audit report lags decrease anywhere from 0.4 to 3.4 percent (0.21 to 1.93 days) in the post-adoption period, depending on the specification used. We further document that these results are concentrated among filers with strong internal control systems and no prior XBRL reporting experience. We also find that audit report lags continue to decline in the years following adoption, which is indicative of a learning curve and improvements in XBRL reporting quality. Additional tests reveal that XBRL is negatively associated with audit fees, suggesting that the XBRL effect is at least partially driven by auditor efficiency gains. Our findings are informative for assessing the economic consequences of requiring XBRL adoption, which should be of interest to regulators, managers, and researchers. JEL Classifications: M41; M42. Data Availability: All data are publicly available from sources quoted in the text.

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

International Journal of Financial Research ◽

10.5430/ijfr.v11n2p61 ◽

2020 ◽

Vol 11 (2) ◽

pp. 61

Author(s):

Lailah Fujianti ◽

Indra Satria

Keyword(s):

Internal Control ◽

Stock Exchange ◽

Random Effect ◽

Financial Statements ◽

Company Size ◽

Manufacturing Companies ◽

Audit Report ◽

Financial Reports ◽

Total Observation ◽

The Impact

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.

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EFEKTIVITAS PENGENDALIAN INTERNAL, AUDIT INTERNAL, KARAKTERISTIK INSTANSI DAN KASUS KORUPSI (STUDI EMPIRIS DI KEMENTERIAN/ LEMBAGA)

Jurnal Tata Kelola & Akuntabilitas Keuangan Negara ◽

10.28986/jtaken.v2i1.35 ◽

2016 ◽

Vol 2 (1) ◽

pp. 27

Author(s):

Nurhasanah Nurhasanah

Keyword(s):

Internal Control ◽

Internal Audit ◽

Secondary Data ◽

Internal Controls ◽

Audit Report ◽

Internal Auditors ◽

Control Effectiveness ◽

Work Units ◽

Positive Effect

ABSTRAKPenelitian ini meneliti pengaruh antara efektivitas pengendalian internal, peran audit internal, tingka kewenangan audit internal, ukuran audit internal, ukuran dan kompleksitas instansi terhadap korupsi di kementerian/lembaga di Indonesia. Efektivitas pengendalian internal dilihat dari jumlah temuan pengendalian internal yang ada di laporan hasil pemeriksaan BPK, sedangkan peran pengawas pengendalian internal dalam suatu instansi dilakukan oleh audit internal diproksikan dengan jumlah temuan ketidakpatuhan dalam peraturan perundang-undangan hasil pemeriksaan BPK. Karakteristik instansi dilihat dari ukuran dan kompleksitas kementerian/lembaga. Variabel dependen yaitu korupsi pada kementerian/lembaga dilihat dari jumlah kasus korupsi pada kementerian/lembaga pada tahun 2012-2014. Penelitian ini menggunakan data sekunder dengan sampel 249 kementerian dan lembaga di Indonesia. Hasil penelitian menunjukkan bahwa efektivitas pengendalian internal, tingkat kewenangan audit internal berupa struktur organisasi audit internal setingkat eselon I berpengaruh dalam menurunkan kasus korupsi. Total anggaran (dalam Rupiah) berpengaruh positif terhadap kasus korupsi. Sedangkan jumlah temuan ketidakpatuhan dalam peraturan perundang-undangan hasil pemeriksaan BPK, jumlah auditor internal dan jumlah satuan kerja pada kementerian/lembaga tidak mempengaruhi korupsi.KATA KUNCI : korupsi, pengendalian internal, peran audit internal, ukuran kementerian/lembaga, kompleksitas kementerian/lembaga. ABSTRACTThis study investigates the effect of internal control effectiveness, the role of internal audit, internal audit authority level, the size of the internal audit, the size and complexity of the institution against corruption in the ministries/agencies in Indonesia. Effectiveness of internal controls seen from the number of internal control findings in the audit report of BPK, while the role of internal audit in an agency's internal control conducted by proxy with the number of findings of noncompliance in the audit report of BPK. The characteristics of institution seen from size and complexity of ministries/ agencies. The dependent variable is the corruption in the ministries/ agencies seen from the number of cases of corruption in the ministries/agencies in 2012-2014. This study used secondary data with samples of 249 ministries and agencies in Indonesia. The results show that the effectiveness of internal control, internal audit authority level form the organizational structure of the internal audit echelon I effect in reducing corruption. Total budget (in Rupiah) has positive effect on corruption. While the number of findings of non-compliance in the audit report of BPK, the number of internal auditors and the number of work units in ministries/agencies does not affect corruption.KEYWORDS : corruption, internal control, internal audit’s role, thesize of the ministries/agencies, the complexity of the ministries/agencies

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The Effect of Auditing Standard No. 5 on Audit Report Lags

Accounting Horizons ◽

10.2308/acch-51052 ◽

2015 ◽

Vol 29 (3) ◽

pp. 507-527 ◽

Cited By ~ 15

Author(s):

Santanu Mitra ◽

Hakjoon Song ◽

Joon Sun Yang

Keyword(s):

Internal Control ◽

Extended Period ◽

Data Availability ◽

Audit Report ◽

Audit Process ◽

Top Down ◽

The Public ◽

Audit Efficiency ◽

Public Company ◽

The Impact

SYNOPSIS Auditing Standard No. 5 (AS5) introduced by the Public Company Accounting Oversight Board (PCAOB) in June 2007 requires a top-down risk-based approach in auditing and is expected to improve audit efficiency and make the overall auditing process timelier by reducing audit report lags. We investigate the impact of AS5 on audit report lags over an extended period from 2006 to 2011 and find that audit report lags are lower in the AS5 years (2007–2011) relative to the AS2 years (2006–2007). But this reduction is evident mostly for the firms with clean SOX 404 opinions. The presence of material internal control weaknesses (ICW) significantly increases audit report lags, but AS5 does not have any incremental moderating effect on report lags and the ICW relationship. Tests for the firms with company-level and account-specific ICWs demonstrate identical results. Additional analyses show that the learning curve effect takes place rapidly in the early part of the AS5 period and audits continue to remain efficient in terms of reduced report lags in the latter part of the AS5 period relative to the AS2 period. The year-to-year change analyses for the AS5 period further corroborate this result. Overall, our study demonstrates that the top-down, risk-based approach under AS5 makes the audit process more efficient and timelier by decreasing audit report lags. Data Availability: Data are available from public sources identified in the paper.

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The Effect of Type of Internal Control Report on Users’ Confidence in the Accompanying Financial Statement Audit Report*

Contemporary Accounting Research ◽

10.1111/j.1911-3846.2011.01080.x ◽

2011 ◽

Vol 29 (1) ◽

pp. 152-175 ◽

Cited By ~ 14

Author(s):

STEPHEN KWAKU ASARE ◽

ARNOLD WRIGHT

Keyword(s):

Internal Control ◽

Financial Statement ◽

Audit Report ◽

Financial Statement Audit

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Determinants Of Audit Report Lag: Evidence From Korea - An Examination Of Auditor-Related Factors

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v24i2.1352 ◽

2011 ◽

Vol 24 (2) ◽

Cited By ~ 1

Author(s):

Ho-Young Lee ◽

Geum-Joo Jahng

Keyword(s):

Internal Control ◽

Audit Fees ◽

Audit Report ◽

Font Size ◽

Related Factors ◽

Audit Opinion ◽

Negatively Associated ◽

Auditor Tenure ◽

Big 4 ◽

Earnings Releases

This study examines whether audit report lag (ARL) is determined by certain auditor-related factors. Understanding the determinants of ARL is important as ARL is the single most important factor in determining the timing of earnings releases and, therefore, improving the timeliness of companies’ announcements of earnings. Unlike prior studies, we are particularly interested in examining various auditor-related factors including audit and non-audit fees received from clients, auditor tenure, type of auditor and audit opinion. Using a recent Korean sample, we find that ARL is negatively associated with non-audit fees paid to incumbent auditors, consistent with “knowledge spillover” from the provision of non-audit services. We also find that ARL is negatively associated with the use of Big 4 auditors and unqualified audit opinions. We are, however, not able to find significant associations between ARL and auditor tenure, or abnormal audit fees paid to incumbent auditors. Additional analyses provide evidence that abnormal audit hours and the provision of tax services, and services relating to the design of internal control systems, significantly reduce ARL.

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II. Audit Report: Dental Education, 1971-72, 1972-73

Journal of Dental Education ◽

10.1002/j.0022-0337.1973.37.8.tb00726.x ◽

1973 ◽

Vol 37 (8) ◽

pp. 7-7

Author(s):

H Hillenbrand

Keyword(s):

Dental Education ◽

Audit Report

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