Lead engagement partner workload, partner-client tenure and audit reporting lag

Abstract

Purpose Motivated by a recent call from DeFond and Zhang (2014) for auditing scholars to use “a richer set of audit firm, auditor office, and individual auditor characteristics to capture competency”, this study aims to extend the related line of research by examining the association between lead engagement partner workload, defined as the number of public listed clients the partner is in charge of, and audit lag. The moderating effects of partner tenure on the partner workload–audit lag relationship have also been examined. Design/methodology/approach The association between auditor workload and financial reporting timeliness on 651 non-financial firms listed on Bursa Malaysia is tested in this study. Data to compute the partner workload are based on 222 lead engagement partners who signed off the audit reports for all 892 public listed firms in 2013. Findings The busy auditors are observed to prolong audit lags, and the effect is more acute for non-Big 4 clients, busy season clients and a short partner tenure. The engagement partners with heavy workload can also mitigate the adverse effects of reduced audit report timeliness when they have a longer partner–client tenure. Research limitations/implications This study may understate the level of engagement partner workload when partners have private firms in their client portfolios. Notwithstanding that, this study reiterates the growing importance of examining accounting and auditing outcomes at the individual partner level. Practical implications The findings that over-burdened engagement partner takes a longer time to complete the audit add to the current debate, where audit regulators and various stakeholders are actively promoting discussions on potential indicators of audit efficiency and quality. Originality/value This study provides new evidence on the association between partner workload and audit reporting lag, which has hitherto been unexplored. This study also extends the research carried out by Gul et al. (2017) and Sharma et al. (2017) by providing additional evidence on the relationship between partner tenure and audit delay.

Audit Committee Characteristics and Audit Report Lag: Evidence From Oman

“…Compared with the developed economies, the result shows that ARL in Oman is somewhat close to ARL in the US and UK, on average, 55 and 64 days respectively (Abernathy et al, 2014;Ghafran &Yasmin, 2018). And compared with the developing markets, such as Egypt and Malaysia, the average of ARL is 72 and 103 respectively (Khlif & Samaha, 2014;Wan-Hussin et al, 2018), indicating that ARL in Oman is shorter. It is believed that this variance in ARL is basically due to the difference in deadline of reporting among countries.…”

“…Given the importance of audit lag to investors, identifying the determinants of audit lag has been of interest of scholars as exhibited in recent research conducted by Abernathy et al (2017), Sharma, Tanyi and Litt (2017), Wan-Hussin, Bamahros and Shukeri (2018) and Salehi, Bayaz and Naemi (2018). However, very few empirical studies investigated the factors impacting the lag of audit report in the MEC particularly with factors of corporate governance (see for example Afify, 2009;Baatwah et al, 2015a;Basuony et al, 2016).…”

An explanatory review of audit market concentration and auditor workload in Malaysia

“…Previous studies also suggest that individual audit partners with more workload are likely to have a bearing on the audit quality (Gul et al, 2017;DeFond& Zhang, 2014). A recent study by Wan Hussin et al (2018) argues that auditors observed to prolong audit reports lag, due to the busy schedule. Partner level audit quality research is limited to data because it requires the audit report to be signed by the audit partner with their name disclose in the report.…”

Implikasi Likuiditas Perusahaan Bagi Opinion Shopping

“…Hasil pengujian (Tabel 6) menunjukkan bahwa audit client tenure bukan merupakan variabel yang menentukan praktik opinion shopping atau membuktikan secara empiris bahwa ternyata audit client tenure tidak ber pengaruh positif. Hasil tersebut tidak men dukung sejumlah peneliti (Brown & Popo va, 2016;Elder, Lowensohn, & Reck, 2015;Gul, Ma, & Lai, 2017;Hussin, Bamahros, & Shukeri, 2018) yang justru menemukan ha sil sebaliknya. Meskipun demikian, peneli tian ini mendukung temuan Karim, Robin, & Suh (2016) karena mereka tidak memiliki bukti yang kuat untuk menyatakan bahwa auditor tenure dapat meningkatkan atau malah menurunkan kualitas proses audit.…”