Investigating the effect of other factors on audit delay

Oct 13, 2025 by talynt.org 48 views

The Effect of Company Size, Solvency, Hood Size, Switching Auditor, and Holding Company on Audit Delay in Manufacturing Companies Listed on the IDX for the 2014-2018 Period

Introduction

The audit process is a crucial aspect of financial reporting, as it provides stakeholders with an independent assessment of a company's financial health. However, audit delays can have significant consequences, including increased costs, reduced investor confidence, and decreased market value. In this study, we aim to analyze the effect of several factors on audit delay in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2014-2018 period. The main focus of this study is the size of the company, solvency, size of the Public Accounting Firm (KAP), auditor changes (auditor switching), and holding companies.

Research Background

Audit delay is a complex issue that has been studied extensively in the literature. However, the factors that contribute to audit delay are not yet fully understood. In this study, we aim to provide a comprehensive analysis of the factors that influence audit delay in manufacturing companies listed on the IDX. Our study is based on a causal approach, which involves analyzing the relationships between independent variables (company size, solvency, KAP size, auditor switching, and holding company) and the dependent variable (audit delay).

Research Methodology

Our study uses a purposive sampling process to select 78 manufacturing companies listed on the IDX, producing 390 observations. We collect data from the company's financial statements, which can be accessed through the official IDX website (www.idx.co.id). For hypothesis testing, we apply multiple linear regression methods.

Research Variables

In this study, we test the following variables:

Company Size: Measuring the magnitude of the operation of a company, usually determined by total assets or income.
Solvency: Shows the company's ability to fulfill its long-term obligations.
KAP Size: Representing the reputation and capacity of the auditor in conducting audits.
Auditor Switching: Referring to auditors' changes that can affect compliance and independence of the audit process.
Holding Company: Ownership structure that might affect the company's financial management and reporting.

Audit Delay

Audit delay is the dependent variable that is the main focus of this study. The measurement is based on the time needed by the company to complete the audit report after the end of the accounting period.

Research Results

The results of our study show that:

Company Size: Negative and significant effect on audit delay. This means that the greater the company size, the faster the audit report is published. This possibility is caused by greater resources and a more structured system.
Solvency: Positive and significant effect on audit delay. Companies with lower solvency tend to experience delays in the audit process, perhaps due to financial problems that interfere with the reporting process.
KAP Size: Negative but not significant on the audit delay. This shows that although there is a tendency to be faster in the settlement of audit by a larger KAP, the effect is not significant enough.
Auditor Switching: Positive but not significant influence on the audit delay. Auditor changes may add to the complexity that causes delays, although the effect is not strong enough to be recognized significantly.
Holding Company: Positive but not significant on the audit delay. The holding structure may slow down the audit process because of the additional management layers that need to be analyzed.

Conclusion

This study provides an important insight into the factors that influence audit delay in manufacturing companies listed on the IDX. The size of the company and solvency is proven to be a major factor that affects the rapid audit settlement. By understanding the effect of these variables, companies can take the right steps to improve the efficiency of the audit process and ensure better compliance with financial reporting standards. This study also provides guidance for stakeholders, including auditors and company managers, in managing audit time more effectively.

Implications of the Study

Our study has several implications for stakeholders, including:

Company Managers: Our study suggests that company managers should focus on improving the efficiency of the audit process by increasing resources and implementing a more structured system.
Auditors: Our study suggests that auditors should consider the size of the company and solvency when planning the audit process.
Regulators: Our study suggests that regulators should consider the factors that influence audit delay when developing policies and regulations related to financial reporting.

Limitations of the Study

Our study has several limitations, including:

Sample Size: Our sample size is limited to 78 manufacturing companies listed on the IDX.
Data Quality: Our data is based on financial statements, which may not reflect the actual financial performance of the companies.
Time Period: Our study is limited to the 2014-2018 period, which may not reflect the current market conditions.

Future Research Directions

Our study suggests several future research directions, including:

Investigating the effect of other factors on audit delay: Our study suggests that other factors, such as industry type and company age, may also influence audit delay.
Examining the impact of audit delay on financial reporting: Our study suggests that audit delay may have a significant impact on financial reporting, including reduced investor confidence and decreased market value.
Developing strategies to improve audit efficiency: Our study suggests that companies and auditors should develop strategies to improve audit efficiency, including increasing resources and implementing a more structured system.
Frequently Asked Questions (FAQs) about the Effect of Company Size, Solvency, Hood Size, Switching Auditor, and Holding Company on Audit Delay in Manufacturing Companies Listed on the IDX for the 2014-2018 Period

Q: What is audit delay, and why is it important?

A: Audit delay refers to the time it takes for a company to complete its audit report after the end of the accounting period. It is an important issue because it can have significant consequences, including increased costs, reduced investor confidence, and decreased market value.

Q: What are the factors that influence audit delay?

A: Our study identifies five factors that influence audit delay: company size, solvency, KAP size, auditor switching, and holding company. These factors can affect the efficiency of the audit process and the time it takes to complete the audit report.

Q: What is the relationship between company size and audit delay?

A: Our study shows that company size has a negative and significant effect on audit delay. This means that larger companies tend to experience faster audit settlement times.

Q: What is the relationship between solvency and audit delay?

A: Our study shows that solvency has a positive and significant effect on audit delay. This means that companies with lower solvency tend to experience delays in the audit process.

Q: What is the relationship between KAP size and audit delay?

A: Our study shows that KAP size has a negative but not significant effect on audit delay. This means that larger KAPs may tend to experience faster audit settlement times, but the effect is not strong enough to be recognized significantly.

Q: What is the relationship between auditor switching and audit delay?

A: Our study shows that auditor switching has a positive but not significant effect on audit delay. This means that auditor changes may add to the complexity that causes delays, but the effect is not strong enough to be recognized significantly.

Q: What is the relationship between holding company and audit delay?

A: Our study shows that holding company has a positive but not significant effect on audit delay. This means that the holding structure may slow down the audit process because of the additional management layers that need to be analyzed.

Q: What are the implications of this study for company managers?

A: Our study suggests that company managers should focus on improving the efficiency of the audit process by increasing resources and implementing a more structured system.

Q: What are the implications of this study for auditors?

A: Our study suggests that auditors should consider the size of the company and solvency when planning the audit process.

Q: What are the implications of this study for regulators?

A: Our study suggests that regulators should consider the factors that influence audit delay when developing policies and regulations related to financial reporting.

Q: What are the limitations of this study?

A: Our study has several limitations, including a limited sample size, data quality issues, and a limited time period.

Q: What are the future research directions suggested by this study?

A: Our study suggests several future research directions, including investigating the effect of other factors on audit delay, examining the impact of audit delay on financial reporting, and developing strategies to improve audit efficiency.

Q: What are the practical implications of this study for stakeholders?

A: Our study provides practical implications for stakeholders, including company managers, auditors, and regulators, in managing audit time more effectively and improving the efficiency of the audit process.