The Moderator Role of Auditor's Expertise in the Industry on the Relationship between Characteristics of the Audit Committee and Audit Report Lag

Document Type : Original Article

Authors

• Zabihollah Khani ¹
• Hossein Rajabdorri ²
• Hajar Jangjoo ¹

¹ Department of Accounting, Fasa Branch, Islamic Azad University, Fasa, Iran

² Department of Accounting, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran

10.22067/ijaaf.2020.39247

Abstract

Timeliness is a fundamental feature of the relevance of financial reporting information to managers, enabling them to make informed business unit decisions. The purpose of this study was to investigate the role of the moderator of auditor's expertise on the relationship between the audit committee's characteristics and the delay in the audit report. This research is from the point of view of applied research type and the point of view of nature and method, including descriptive and correlational research. The research sample includes 135 companies listed on the Tehran Stock Exchange in the years 2013 to 2017. After controlling the control variables, the hypothesis test's findings showed that the auditor's specialization in the industry negatively correlates the relationship between the audit committee's independence and the audit committee's size and the delay in the audit report.

Keywords

• Auditor's Expertise in Industry
• Audit Committee
• Delay in Audit Report

---

References

Abernathy, J. Beyer, B. and Masli, A. (2014). The association between characteristics of
audit committee experts, Audit committee chairs and financial reporting timeliness.
Advances in Accounting, 30(2), 283-297.
ttps://doi.org/10.1016/j.adiac.2014.09.001
Alavi Tabari, H. and Aref Menash. Z. (2013). Investigating the Relationship between the
Audience Industry Specialty and the delay in the Presentation of the Audit Report
in the Companies Accepted in the Tehran Stock Exchange. Journal of Accounting
Iranian
Journal of
Accounting,
Auditing &
Finance
10
Knowledge, 4(14), 4- 26. https://www.sid.ir/fa/journal/ViewPaper.aspx?id=206594
(in Persian)
Appah, E. and Emeh, Y. (2013). Corporate governance structure and timeliness of
financial reports of quoted firms in Nigeria. European Journal of Business and
Management, 5(32), 34–45.
Bamber, E.M. Bamber, L.S. and Schoderbek, M.P. (1993). Audit structure and other
determinants of audit reporting: An empirical analysis. Auditing: A Journal of
Practice and Theory, 12 (1), 1–23.
https://search.proquest.com/openview/a8d82113df56a13c60231c2163e133e9/1?p
q-origsite=gscholar&cbl=31718
Barzide, F. and Ma'andenchi, M. (2014). The Effect of Specialist Audit Institution on the
Delay of Audit. Audit, Theory and Practice Report, 1, (in Persian)
Bazrafshan, A. Hejazi, R. and Rahmani, A. (2015). Review of the independence of the
Audit Committee and the quality of financial reporting. Journal of Management
Accounting. 8(25), 117-101. http://jma.srbiau.ac.ir/article_6732.html (in Persian)
Berle, M. (2012). The modern corporation and private property. New York, World Inc.
Blue Ribbon Committee (1999), The Report and Recommendations of the Blue Ribbon
Committee on Improving the Effectiveness of Corporate Audit Committees. New
York: New York Stock Exchange and National Association of Securities Dealers.
The business lawyer, 54(2), 1067-1095.
Choi, J. Jeon, K. and Park, J. (2004). The role of audit committees in decreasing earnings
management: Korean evidence. International journal of accounting, Auditing and
Performance Evaluation, 1(1), 37-60. Doi: 10.1504/IJAAPE.2004.004142
Dao, M. and Pham, T. (2014). Audit Tenure, Auditor Specialization and Audit Report
Lag. Managerial Auditing Journal, 29 (6), 490-512. https://doi.org/10.1108/MAJ-
07-2013-0906
DeZoort, F. Hermanson, D. and Houston, R. (2003). Audit committee support for
auditors: The effects of materiality justification and accounting precision. Journal
of Accounting and Public Policy, 22(2), 175–99. https://doi.org/10.1016/S0278-
4254(03)00007-3
Frost, C.A. and Pownall, G. (1994). Accounting disclosure practice in the United States
and the United Kingdom. Journal of Accounting Research, 32, (1), 75-85.
https://doi.org/10.2307/2491388
Habbash, M. (2010). The effectiveness of corporate governance and external audit on
constraining earnings management practices in the UK. Ph.D. thesis. Durban
University.
Habib, A. and Bhuiyan, M.B.U. (2011). Audit firm industry specialization and the audit
report lag. Journal of International Accounting, Auditing and Taxation, 20 (1), 32-
44. https://doi.org/10.1016/j.intaccaudtax.2010.12.004
Hasas Yeganeh, Y. Didar, H. and Eskandari, A. (2014). Investigating the relationship
between corporate governance and the quality of optional and optional accruals in
affiliated companies in Tehran Stock Exchange. Financial Accounting Research,
19, 1-14.
Jaggi, B. and Tsui, J. (1999). Determinants of audit report lag: Further evidence from
Hong Kong. Accounting and Business Research, 30 (1), 17–28.
https://doi.org/10.1080/00014788.1999.9728921
Kamarudin, k. Ismail, W. Yaacob, Z. and Abu Bakar. S. (2018). Auditor Specialization
and Its Influence on the Association between Governance and the Timeliness of
Financial Reporting. State-of-the-Art Theories and Empirical Evidence, DOI:
10.1007/978-981-10-6926-0_6.
Kend, M. (2008). Client Industry Audit Expertise: Towards A Better Understanding.
The
Moderator
Role of
Auditor's
Expertise in
the
Industry on
the
relationship
between
11
Pacific Accounting Review, 20(1), 49-62. Doi: 10.1108/01140580810872843
Kogilavani, A. and Marjan M.N. (2013). Determinants of audit report lag and corporate
governance in Malaysia. International Journal of Business & Management, 8(15),
151–163. Doi: 10.5539/ijbm.v8n15p151
Kwon, S.Y. Lim, C.Y. and Tan, P. (2007). Legal systems and earnings quality: the role
of auditor industry specialization. Auditing: A Journal of Practice and Theory, 26
(2), 25-55. DOI: 10.2308/aud.2007.26.2.25
Leventis, S. Weetman, P. and Caramanis, C. (2005). Determinants of audit report lag:
Some evidence from the Athens Stock Exchange. International Journal of Auditing,
9 (1), 45–58. https://doi.org/10.1111/j.1099-1123.2005.00101.x
Lin, Z.J. and Liu, M. (2009). The Impact of Corporate Governance on Auditor Choice:
Evidence from China. Journal of International Accounting, Auditing and Taxation,
18 (1), 44–59. https://doi.org/10.1016/j.intaccaudtax.2008.12.005
Mohamad-Nor, M. Shafie, R. and Wan-Hussin, W.N. (2010). Corporate governance and
audit report lag in Malaysia. Asian Academy of Management Journal of accounting
and finance, 6 (2), 57–84.
Nazemiardakani, M. (2009). Investigating the Role of Specialist Auditors on Profit
Management of Companies Accepted in the Stock Exchange. Master's Thesis, and
Faculty of Economic Sciences.
Owhoso, V.E. Messier, W.F. and Lynch, J.G. (2002). Error detection by industry-
specialized teams during sequential audit review. Journal of Accounting Research,
40 (3), 883-900. https://doi.org/10.1111/1475-679X.00075
Palmrose, Z. (1986). Audit fees and auditor size: further evidence. Journal of Accounting
Research, 24(1), 97-110. https://doi.org/10.2307/2490806
Poorheidari, O. Borhaninezhad, S. and Mohammadreza Khani, V. (2015). The Effect of
Audit Quality on the Accuracy of the Audit Report in Companies Accepted in the
Tehran Stock Exchange. Knowledge of Auditing, 58, 85-104.
Samaha, K. and Khlif, H. (2017). Audit-related attributes, Regulatory Reforms and
Timely Disclosure: Further Evidence from an Emerging Market. Journal of
Financial Reporting and Accounting, 15 (2), 1- 32.
https://ideas.repec.org/a/eme/jfrapp/jfra-08-2015-0077.html
Soltana, N. Harjinder, S. and Vander, Z. (2014). Audit committee characteristics and audit
report lag. International Journal of Auditing, 19(2), 57-130.
https://doi.org/10.1111/ijau.12033
Soltani, B. (2002). Timeliness of corporate and Audit Reporting: some Empirical
Evidence in the French Context. The International Journal of Accounting, 37(2),
215-246. https://doi.org/10.1016/S0020-7063(02)00152-8
Turley, S. and Zaman, M. (2007). Audit committee effectiveness, informal processes and
behavioral effects. Accounting, Auditing & Accountability Journal, 20(5), 765–88.
https://EconPapers.repec.org/RePEc:eme:aaajpp:v:20:y:2007:i:5:p:765-788