International Journal of Innovative Technology and Exploring Engineering (IJITEE)
ISSN: 2278-3075, Volume-9 Issue-1, November 2019
2214
Published By:
Blue Eyes Intelligence Engineering
& Sciences Publication
Retrieval Number: A4787119119/2019©BEIESP
DOI: 10.35940/ijitee.A4787.119119
Abstract: audit report lag has become a phenomenon that
cannot be denied is one of the problems that is quite disturbing.
Audit report lag is detrimental to users of financial statements.
Users of financial statements take longer to receive financial
statements, even though they want to use the financial statements
as a decision-making tool. This study aims to provide empirical
evidence of the influence of profitability, leverage, audit opinion,
and reputation of public accounting firms on audit delay in listed
manufacturing companies in the Indonesia Stock Exchange. This
research is quantitative, using secondary data. The population of
this study is the food and beverage sub-sector manufacturing
companies listed on the Indonesia Stock Exchange in 2014-2017.
The testing of the hypothesis used in this study is multiple linear
regression analysis. After passing the data processing process that
is processed in SPSS, the results of the study show that leverage
affects audit delay, while profitability, audit opinion, and the
reputation of public accounting firms do not significantly
influence audit delay. In this study, the authors did not test
together the effect of all variables on audit delay.
Keywords : audit delay, profitability, leverage, audit opinion,
reputation of firm
I. INTRODUCTION
Financial statements are an important thing in every
company, because it becomes a bridge for outsiders with the
company. But, of course the company wants to have financial
reports that look good from the outside. To overcome these
irregularities, both parties must appoint a third party, namely
the Auditor. The auditor, as an independent party, has the duty
to provide an opinion on the company's financial statements
by auditing or auditing [1], [2]. The development of the
capital market in Indonesia which is increasingly marked by
the growing development of companies that go public
resulted in increased demand for financial statement audits
[3]. Financial statements that provide information regarding
the financial position of a company are often used as a basis
by investors for making decisions about a company. A
financial statement fulfills its usefulness if it is presented
accurately and in a timely manner. Timeliness is the most
important characteristic of financial statements. For those
who are interested in the company's financial condition,
Revised Manuscript Received on November 05, 2019.
* Correspondence Author
Bambang Leo Handoko*, Accounting Department, Faculty of
Economics and Communication, Bina Nusantara University, Jakarta,
Indonesia, 11480. Email: bambang.handoko@binus.edu
Kevin Deniswara, Accounting Department, Faculty of Economics and
Communication, Bina Nusantara University, Jakarta, Indonesia, 11480.
Email: kdeniswara@binus.edu
Christy Nathania, Accounting Department, Faculty of Economics and
Communication, Bina Nusantara University, Jakarta, Indonesia, 11480.
Email: christynathania24@ymail.com
accurate and timely information is very important to
determine the decision making. The shorter the time interval
between the end of the accounting period and the date of
publication of the financial statements, the more profit will be
derived from the financial statements.
Audited financial statements can increase the confidence of
users of financial statements on financial statements produced
by the company. Based on the Basic Framework for the
Preparation and Presentation of Financial Statements of
Financial Accounting Standards [4], financial statements
must meet four qualitative characteristics that are
characteristic of financial statement information that is useful
for its users. These four characteristics are understandable,
relevant, reliable, and comparable. To obtain relevant
information, there are several obstacles, one of which is the
timeliness constraint. This is in accordance with PSAK No. 1
concerning Presentation of Financial Statements paragraph
43; that is if there is an undue delay in reporting, the
information produced will lose its relevance. Therefore, an
audit of financial statements needs to be done so that users of
financial statements feel more confident about the quality of
financial statements issued by the company. In addition,
audits of financial statements conducted by independent
auditors will provide benefits such as increasing the
credibility of financial statements, reducing company fraud,
and providing a more reliable basis for tax reporting and other
financial statements that must be submitted to the
government.
[5] stated that financial statements are information that can
contain both good news and bad news. If the financial
statements are submitted late it will cause a negative reaction
from capital market players and can influence investment
decisions. Meanwhile, according to [6] the timely delivery of
financial statements is very important for companies going
public using the capital market as a source of funding. Late
submission of financial statements can be influenced by the
length of time the audit is completed by the auditor. The faster
the audit work is completed, the faster the financial statements
are published and vice versa. According to [7], the shorter the
time period between the end date of the fiscal year and the
date of publication of financial statements, the greater the
benefits obtained by users of financial statements.
Conversely, a lag in publishing financial statements will
encourage uncertainty in making decisions based on
information contained in the financial statements. The time
difference between the dates of the financial statements with
the date of the audit opinion in the financial statements
indicates the length of time the settlement is carried out by the
auditor, this condition is often called audit report lag.
Effect of Profitability, Leverage, Audit Opinion
and Firm Reputation toward Audit Report Lag
Bambang Leo Handoko, Kevin Deniswara, Christy Nathania