Dyah Ayu Cahyaningtyas

12030112140113
Kelas B

Audit tenure, auditor

specialization and audit
report lag
Mai Dao

Department of Accounting, University of Toledo, Toledo, Ohio, USA, and

Trung Pham

Department of Accounting and Information Systems, Michigan State

University, East Lansing, Michigan, USA

Abstract
Purpose This paper aims to examine the association between audit firm tenure and
audit report lag (ARL) and the impact of auditor industry specialization on the
association between audit firm tenure and ARL.
Design/Methodology/Approach Using Habib and Bhuiyans (2011) method of
measuring auditor
industry specialization, the authors examine the sample of 7,291 firm-year observations
from 2008 to
2010.
Findings The authors find that auditor industry specialization (regardless of city-level,
national-level and joint city- and national-level industry specialization) weakens the
positive association between ARL and short audit firm tenure, suggesting that auditor
industry specialization complements the negative effect of short audit firm tenure on
ARL.
Originality/value First, the authors add to the literature by answering the question of
whether
hiring industry auditor specialists is an effective way to shorten ARL created by short
audit tenure. The authors provide some evidence that the concern of short audit tenure
leading to longer ARL is reduced by hiring an industry-specialized auditor. Prior research
mainly focuses on identifying the determinants of ARL without going further to find out
which are the effective ways to reduce the audit delay. Second, their findings can
somehow resolve the debate on whether audit firm rotation should be mandatory. A new
auditors lack of knowledge of clients business operations during the early years of
audit engagements results in longer ARL, which eventually influences the clients
financial performance. The authors result suggests the firms can reduce this adverse
consequence by hiring an industry-specialized auditor. Finally, their findings may
provide helpful information to firms in
selecting external auditors, public accounting firms in selecting a differentiation strategy
and
regulators in mandating audit firm rotation.

Keywords Audit firm tenure, Audit report lag, Auditor industry specialization
Paper type Research paper

Dyah Ayu Cahyaningtyas

12030112140113
Kelas B

Audit committee effectiveness

and timeliness of reporting:
Indonesian evidence
Siti Rochmah Ika
Accounting Department, Faculty of Economics,
Janabadra University Yogyakarta, Yogyakarta, Indonesia, and

Nazli A. Mohd Ghazali

Department of Accounting, Kulliyyah of Economics and Management Sciences,

International Islamic University Malaysia, Kuala Lumpur, Malaysia

Abstract

Purpose The purpose of this paper is to examine the association between

audit committee
effectiveness and timeliness of reporting. Specifically, the paper investigates
whether there is any
relationship between effectiveness of an audit committee and submission of
audited financial
statements to the Indonesian Stock Exchange (IDX).
Design/methodology/approach Audit committee effectiveness is measured
by an index based
on the framework developed by DeZoort et al. Timeliness of reporting is defined
as the number of days that elapses between a companys financial year-end and
the day on which its audited financial
statement is received by the IDX. The sample comprises 211 non-financial
Indonesian listed
companies. Multivariate regression analysis was performed to analyse the
relationship between audit
committee effectiveness and timeliness of reporting.
Findings The findings show that timeliness of reporting is associated with
audit committee
effectiveness. This result suggests that audit committee effectiveness is likely to
reduce the financial
reporting lead time, i.e. the time taken by companies to publicly release audited
financial statements to the stock exchange.

Research limitations/implications The audit committee effectiveness index

employed in this
study was based on DeZoort et al.s framework. There could be other aspects of
audit committee
effectiveness such as the organizational context or multiple-directorship which
had not been addressed in the present study. Thus, future research may
consider and examine these other aspects in
developing a more comprehensive index.
Practical implications The findings suggest that audit committee
effectiveness is a significant
factor ensuring timely submission of audited financial statements. Thus,
companies perhaps can
re-look into how to further improve audit committee effectiveness in order to
enhance timeliness of
financial reporting.
Originality/value Unlike the majority of prior studies which investigated the
association between
the presence/absence of audit committee and timeliness of reporting, this study
is one of few which
examined the relationship between effectiveness of audit committee and
timeliness of reporting in an
emerging country.
Keywords Indonesia, Stock exchanges, Financial reporting, Audit committees,
Audit committee effectiveness, Timeliness, Late filings, Indonesian stock
exchange
Paper type Research paper