Determinants of audit report lag in the banking industry: Updated evidence

Fatima A. Alali, Randal J. Elder

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

This study examines the determinants of audit report lag (ARL) in the banking industry. Using data from 2001-2010 and models developed from prior research for banks, the pooled sample results show that bank size measured by market capitalisation and profitability measured by return on assets are associated with shorter ARL. Extraordinary items and higher abnormal audit fees are associated with longer ARL. We find that these results are driven by large banks that are subject to internal control requirements under the Federal Deposit Insurance Corporation Improvement Act and Sarbanes-Oxley Act. We find that the audit of internal controls over financial reporting and the presence of material weaknesses in internal controls are associated with longer ARL in the large bank subsample. The study provides updated evidence on the determinants of audit report lag in the banking industry and finds that the determinants of ARL have changed over a period of regulatory and economic changes in the last decade.

Original languageEnglish (US)
Pages (from-to)364-394
Number of pages31
JournalInternational Journal of Accounting, Auditing and Performance Evaluation
Volume10
Issue number4
DOIs
StatePublished - Jan 1 2014

Keywords

  • ARL
  • Accounting
  • Audit report lag
  • Auditing
  • Banks
  • Economic change
  • FDICIA
  • Federal deposit insurance corporation improvement act
  • Regulatory change
  • SOX
  • Sarbanes-oxley act

ASJC Scopus subject areas

  • Accounting
  • Organizational Behavior and Human Resource Management
  • Finance

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