scholarly journals Timeliness of financial reporting and audit committee effectiveness: evidence from UAE

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
Mohammed Ali Almuzaiqer
Keyword(s):  
United Arab Emirates ◽  
Financial Reporting ◽  
Capital Markets ◽  
Audit Committee ◽  
Listed Companies ◽  
Audit Committees ◽  
Audit Report ◽  
Financial Reports ◽  
Code Of Corporate Governance ◽  
The Impact

ABSTRACT Purpose – This study aims to examine the contemporary timeliness of financial reporting in the United Arab Emirates (UAE), and the impact of audit committee effectiveness on this timeliness. Design/Methodology/Approach – Timeliness of financial reporting in this study is measured by audit report lag (ARL), which is the number of days between the date of the financial year end and the date of the audit report. The data from listed companies on the UAE capital markets; Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM), for three years from 2011 to 2013 resulted in 298 observations. The main statistical techniques of the study are means and multiple regressions. Findings – The findings show that generally all companies meet the submission deadlines imposed by the two UAE markets. Furthermore, ARL is influenced by audit committee size and profitability, while no evidence is found to support the effect of audit committee expertise, audit committee meetings and firm size on ARL. Practical Implications – The results of the study show that only audit committee size has a significant influence in reducing ARL. This may be attributed to having minimal variation in the implementation of the Code of Corporate Governance (CCG), particularly audit committee attributes, in the UAE. The results suggest that the current governance by audit committees is adequate to ensure that the financial reports of companies in the UAE are timely. However, except for audit committee size, the other audit committee attributes are unable to further shorten ARL.   Originality/Value –The capital markets in the UAE and its CCG are relatively new. Hence, regulatory requirements may be less stringently implemented by companies in this country. Consequently, timely audited financial reports are demanded by local and international investors to make decisions and alleviate speculation. Thus, determining audit committee attributes that reduce ARL is beneficial to the UAE markets, the listed companies and investors.     Keywords Audit report lag (ARL), Financial reporting timeliness, Audit committee, UAE Paper Type: Research paper

Audit committee effectiveness and financial reporting timeliness

2018 ◽  
Vol 9 (1) ◽  
pp. 34-55 ◽  
Author(s):  
Ahmed Atef Oussii ◽  
Neila Boulila Taktak
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Emerging Market ◽  
Listed Companies ◽  
Audit Committees ◽  
Future Research ◽  
Governance System ◽  
Content Type ◽  
Financial Expertise ◽  
The Impact

Purpose The purpose of this paper is to investigate whether there is any relationship between the effectiveness of an audit committee and the financial reporting timeliness of Tunisian listed companies as proxied by external audit delay (AD). Analysis focuses on five audit committee characteristics: authority, financial expertise, independence, size and diligence. Design/methodology/approach Empirical tests address 162 firm-year observations drawn from Tunisian listed companies during 2011-2013. Findings Multivariate analyses indicate that audit committees with members who have financial expertise are significantly associated with shorter AD. Thus, the results suggest that audit committee financial expertise contributes to the improvement of financial statements’ timeliness. Research limitations/implications The audit committee attributes examined in this study were based on DeZoort et al. (2002) framework. There could be other aspects of audit committee effectiveness such as audit committee tenure and audit committee chair characteristics, which were not addressed in the present study. Thus, future research may consider and examine these other components of audit committee effectiveness. Practical implications Findings have managerial implications. Companies can re-look into how to further improve audit committee composition in order to enhance the timeliness of financial reporting. The issues of audit committee effectiveness and timely reporting also affect regulators and policy makers since they need to play a role in the establishment of effective audit committees and the improvement of financial reporting timeliness. Originality/value This study is one of few that have examined the impact of audit committee effectiveness on ADs in an emerging market country. Findings lend credence to the belief that audit committee members’ financial expertise enhances the quality of financial reporting by firms in a North African market criticized for the lack of maturity of its corporate governance system (Klibi, 2015; Fitch Ratings, 2009).

scholarly journals Audit committee quality and audit report lag: the role of mandatory adoption of IFRS in Saudi companies

Accounting ◽  
2021 ◽  
pp. 167-178
Author(s):  
Mahfod Mobarak Aldoseri ◽  
Nasr Taha Hassan ◽  
Magdy Melegy Abd El Hakim Melegy
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Audit Committees ◽  
Strong Impact ◽  
Audit Report ◽  
Before And After ◽  
Mandatory Adoption ◽  
The Impact ◽  
Weak Influence

This paper aims to examine the effect of audit committee characteristics on audit report lag, and also explores whether this effect will vary between before and after mandatory adoption of IFRS in Saudi listed companies. Based on a Saudi sample of 388 firm-year observations from 2015 to 2018, the Poisson regression analysis shows that among audit committee characteristics, only audit committee financial experience significantly influences the timing of financial reporting. The result indicates a weak influence of audit committees on timeliness of financial reporting, which is consistent with the results of most of previous studies. On the other hand, the results show a strong impact of the adoption of IFRS on the context of that relationship, where the results show the impact of IFRS on audit report lag, audit committee quality and the association between them.

scholarly journals An Investigation on the Audit Committees Effectiveness: The Case for GLCs in Malaysia

2011 ◽  
Vol 13 (3) ◽  
pp. 287 ◽  
Author(s):  
Nurul Nazlia Jamil ◽  
Sherliza Puat Nelson
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Financial Expertise ◽  
Monitoring Mechanism ◽  
The Impact

Financial reporting quality has been under scrutiny especially after the collapse of major companies. The main objective of this study is to investigate the audit committee’s effectiveness on the financial reporting quality among the Malaysian GLCs following the transformation program. In particular, the study examined the impact of audit committee characteristics (independence, size, frequency of meeting and financial expertise) on earnings management in periods prior to and following the transformation program (2003-2009). As of 31 December 2010, there were 33 public-listed companies categorized as Government-Linked Companies (GLC Transformation Policy, 2010) and there were 20 firms that have complete data that resulted in the total number of firm-year observations to 120 for six years (years 2003-2009).  Results show that the magnitude of earnings management as proxy of financial reporting quality is influenced by the audit committee independence. Agency theory was applied to explain audit committee, as a monitoring mechanism as well as reducing agency costs via gaining competitive advantage in knowledge, skills, and expertise towards financial reporting quality. The study is important as it provides additional knowledge about the impact of audit committees effectiveness on reducing the earnings management, and assist practitioners, policymakers and regulators such as Malaysian Institute of Accountants, Securities Commission and government to determine ways to enhance audit committees effectiveness and improve the financial reporting of GLCs, as well as improving the quality of the accounting profession.     

Audit committee ownership and audit report lag: evidence from Australia

2020 ◽  
Vol 28 (1) ◽  
pp. 96-125
Author(s):  
Md. Borhan Uddin Bhuiyan ◽  
Mabel D’Costa
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Financial Statements ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Audit Report ◽  
Content Type ◽  
External Auditors ◽  
Using Data

Purpose This 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/approach This 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. Findings Using 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/value The study contributes to both the audit report timeliness and the corporate governance literatures, by documenting an adverse effect of audit committee ownership.

scholarly journals The Impact of the Audit Committees' Properties on the Quality of the Information in the Banking Financial Reports: A Survey on Saudi Commercial Banks

2017 ◽  
Vol 10 (11) ◽  
pp. 175
Author(s):  
Mwafag Rabab’ah ◽  
Omar Al-Sir ◽  
Ali A. Alzoubi
Keyword(s):  
Commercial Banks ◽  
Audit Committee ◽  
Audit Committees ◽  
Financial Reports ◽  
Audit Team ◽  
The Impact

This study aims to identify the impact of the audit committees' properties on the quality of the information of the banking financial reports in the Saudi commercial banks by identifying the effect of identifying tasks and duties, independence, accounting and banking experience and efficiency of the audit committee on achieving the quality of the Saudi banking and financial reports. 110 questionnaires were distributed on the research sample and 105 questionnaires were received and analyzed through ANOVA. Results indicate that the availability of the audit committees' properties affect increasing the quality of the financial reports in the Saudi banking at the level of properties as a whole where the (P) probable value was (0.000 ), which is less than 0.05. It represents the functions and duties of the audit committee, the committee's independence in banks, the availability of the accounting and banking experience for the members of the audit committee and the efficiency of the audit committees at banks. The study recommends more emphasis on the diversity of the experiences of the members of the audit team and thus; the committee can performs its functions in a more efficient and effective way.

The Impact on Auditor Judgments of CEO Influence on Audit Committee Independence

2011 ◽  
Vol 30 (4) ◽  
pp. 129-147 ◽  
Author(s):  
Jeffrey R. Cohen ◽  
Lisa Milici Gaynor ◽  
Ganesh Krishnamoorthy ◽  
Arnold M. Wright
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Data Availability ◽  
Audit Committees ◽  
Undue Influence ◽  
Management Incentives ◽  
Auditor Judgments ◽  
The Impact ◽  
Selection Of

SUMMARY Despite the importance of audit committee independence in ensuring the integrity of the financial reporting process, recent research suggests that even when audit committees meet regulatory independence requirements, certain factors, such as undue influence by the CEO over the selection of the audit committee, may diminish the ability of its members to be substantively independent. This study investigates whether auditors consider CEO influence over audit committee independence when making audit judgments where management's incentives to manage earnings differ. In an experiment, we find that audit partners and managers waive a larger amount of a proposed audit adjustment when management's incentives for earnings management are low than when incentives are high. However, when management incentives are high, auditors are less likely to waive as much of an adjustment when the CEO has less influence over the audit committee's independence than when the CEO's influence is greater. In all, the results support our expectations that auditors consider CEO influence on audit committee independence in the resolution of contentious accounting issues. Data Availability: Contact the authors.

The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

2019 ◽  
Vol 95 (5) ◽  
pp. 23-56 ◽  
Author(s):  
Musaib Ashraf ◽  
Paul N. Michas ◽  
Dan Russomanno
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Audit Committee ◽  
Data Availability ◽  
Audit Committees ◽  
Material Weaknesses ◽  
Other Information ◽  
High Quality Information ◽  
The Impact

ABSTRACT We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatement, a reduction in the likelihood of information technology-related material weaknesses (which account for 55 percent of all reported material weaknesses), and more timely earnings announcements at firms with audit committee information technology expertise. These findings are robust to controlling for a firm's other information technology attributes, as well as when using entropy balanced samples, and we mitigate endogeneity concerns with evidence that our findings hold in a subsample of firms that all possess overall high-quality information technology. Finally, a difference-in-differences analysis, inclusion of firm fixed effects, and a falsification test largely support our assertion that the quality of financial reporting is significantly improved by the presence of an audit committee information technology expert. JEL Classifications: M41; M15. Data Availability: All data used in the study are publicly available.

Evaluating Financial Reporting Quality: The Effects of Financial Expertise vs. Financial Literacy

2002 ◽  
Vol 77 (s-1) ◽  
pp. 139-167 ◽  
Author(s):  
Linda McDaniel ◽  
Roger D. Martin ◽  
Laureen A. Maines
Keyword(s):  
Financial Reporting ◽  
Financial Literacy ◽  
Audit Committee ◽  
Reporting Quality ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Financial Reports ◽  
Business Press ◽  
Financial Expertise

Audit committees evaluate financial reporting quality as part of their corporate oversight responsibilities. Given this responsibility, the national stock exchanges now require all audit committee members to be financially literate and at least one member to have financial expertise. In light of recent debates over this requirement, we provide evidence on how experts and literates differ in their evaluations of financial reporting quality. Results suggest that experts' evaluations of financial reporting quality are more strongly associated with their assessments of characteristics underlying reporting quality (e.g., relevance) espoused in Statement of Financial Accounting Concepts No. 2's framework than literates' evaluations. Additionally, literates are more likely than experts to identify concerns about reporting treatments for business activities that are prominent in the business press or are distinguished by their nonrecurring nature, while experts are more likely to raise concerns about reporting treatments for less prominent, recurring activities. This same pattern occurs in the ratings of the quality of the reporting treatments for specific financial statement items with respect to elements underlying reporting quality (e.g., neutrality); literates (experts) assess the quality elements for the reporting treatments of prominent and nonrecurring items (less prominent and recurring items) comparatively lower than experts (literates). These results suggest that including financial experts on audit committees is likely to change the structure and focus of audit committee discussions about financial reporting quality, and may affect the committee's overall assessment of the quality of a company's financial reports.

scholarly journals The Substitution Role of Audit Committee Effectiveness and Audit Quality in Explaining Audit Report Lag

2019 ◽  
Vol 4 (1) ◽  
pp. 28-37
Author(s):  
Husaini Husaini ◽  
Saiful Saiful ◽  
Fitrawati Ilyas
Keyword(s):  
Agency Theory ◽  
Financial Reporting ◽  
Audit Committee ◽  
Audit Quality ◽  
Multivariate Regression Analysis ◽  
Jel Classification ◽  
Audit Committees ◽  
Audit Report ◽  
Audit Reports ◽  
The Relationship

Objective - This study aims to examine the relationship between audit committee effectiveness on Audit Report Lag (ARL), and the moderating effect of audit quality on the relationship between audit committee effectiveness and ARL. Methodology/Technique - 109 non-financial Indonesian listed companies are examined from 2012 to 2016. The data is analysed using multivariate regression analysis. Findings - The results show that audit committee effectiveness negatively affects ARL. This indicates that an effective audit committee can accelerate the delivery of audit reports. The results on the interaction between audit committee effectiveness and audit quality also negatively affects ARL. These results indicate that audit quality strengthens the influence of audit committees on the timeliness of financial reporting by reducing audit report lag. Novelty - The results show that there is a relationship of substitution between audit committee effectiveness and audit quality (Big-4) on ARL. The results of this study are consistent with agency theory which states that the implementation of corporate governance, such as an effective audit committee and audit quality, can improve the quality of financial reports. Type of Paper Empirical. Keywords: Audit Committee Effectiveness; Audit Quality; Audit Report Lag; Agency Theory. JEL Classification: M42, M41. DOI: https://doi.org/10.35609/afr.2019.4.1(5)

scholarly journals An analysis of audit committee effectiveness at the largest listed companies in South Africa from a CFO and audit committee perspective

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Ben Marx
Keyword(s):  
South Africa ◽  
Financial Reporting ◽  
Internal Control ◽  
Financial Literacy ◽  
Audit Committee ◽  
Listed Companies ◽  
Audit Committees ◽  
Chief Financial Officers ◽  
Subject Field ◽  
Effective Functioning

Purpose: The purpose of the study is to investigate and analyse the effective functioning of audit committees at the largest listed companies in South Africa.Problem investigated: The modern audit committee is often seen as the panacea of the corporate world and as such is looked upon to cure all the financial reporting and control-related problems of entities. Audit committees are, however, not always as effective as they are held to be, as is evidenced by the many well-known corporate scandals and business failures that occurred where audit committees existed and fraudulent financial reporting, audit failures, internal control breakdowns and other irregularities prevailed. The modern audit committee will be of value only if it is properly constituted, is functioning effectively and if its role is clearly understood by all the parties concerned. The research problem investigated stems precisely from this issue, and the paper therefore aims to analyse the effective functioning of the audit committees at the largest listed companies in South Africa. Methodology: The study empirically tested the audit committee practices at the largest listed companies in South Africa. This was done through questionnaires addressed to the CFOs and audit committee chairs. Findings: The study found that audit committees at the largest listed companies in South Africa are well established, properly constituted, have the authority and resources to effectively discharge their responsibilities and consist of members who act independently and who have the right mix of appropriate experience, financial literacy and financial expertise amongst their members. The audit committee's role was found to be generally well understood and supported by the board and the Chief Financial Officers. It was further found that the audit committees are effective in discharging their oversight responsibilities on the board's behalf, with the only real exception being their effectiveness regarding IT-related aspects. Value of research: The study provides valuable information on audit committee practices and the effectiveness of audit committees at the largest listed companies in South Africa. These findings can therefore serve as guidelines for best practice standards for audit committees at other companies and institutions. Conclusion: Audit committees at the largest listed companies in South Africa were found to be well established and according to the views of the CFOs and audit committee chairs to be functioning effectively. Further research regarding the subject field of audit committees should focus on the status and effective functioning thereof at smaller companies, unlisted entities, higher education institutions and public sector entities.

Sign in / Sign up

Export Citation Format

Share Document