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This study investigates the association between interim audits and final audits. The authors focus on whether interim audits affect the audit time lag and the risk of restatement associated with final audits.

Two regression models are established to empirically test if an interim audit helps to reduce the audit time lag and the restatement risk on annual reports based on a sample of Chinese listed firms.

The authors find that performing interim audits helps to reduce the audit time lag. This result suggests that final audits can be completed more efficiently when interim audits are performed during the same period. The authors also find that the decision to audit interim reports is associated with a lower risk of restating annual reports. The lower risk of restatement in turn suggests more effective final audit results.

Together, the results from this study demonstrate that interim audits could benefit final audits, which highlight the value and importance of the continuous auditing.

This paper examines the relationship between accounting outsourcing and audit lag. Accounting outsourcing may reduce misstatement risk, reducing the amount of audit effort necessary and thereby decrease audit lag. Alternatively, outsourcing may increase the amount of coordination necessary between the auditor, client management and the outside accounting service provider and thereby increase audit lag.

The accounting outsourcing/audit lag relationship is examined among closed-end mutual funds. These funds often outsource their accounting functions and disclose the names and services provided by any company providing services to the fund. These disclosures permit a consistent measurement of whether the fund outsources their accounting functions or performs them in-house.

This paper finds a positive relationship between accounting outsourcing and audit lag; outsourcing funds have audit lags that are two to three days longer than those not outsourcing their accounting. The results are robust to different specifications, controls for the distinctive characteristics of closed-end funds and consideration of endogeneity.

Closed-end funds could consider the increased time necessary to complete the audit when deciding whether to outsource their accounting functions.

By identifying a unique setting in which outsourcing data can be consistently obtained and analyzed (i.e. closed-end funds), this is the first study to empirically evaluate the relationship between accounting outsourcing and audit lag.

Regulators treat all non-audit services the same by using a broad-brush approach which is reflected in the study of total non-audit fees in the same analyses or different non-audit fees in isolation by prior studies. To know whether the non-audit services have different effects and hence, should be regulated separately, this paper compares their effects on audit report lag and examines whether they follow the implied hierarchy of the Securities and Exchange Commission.

The effects of audit-related non-audit fees, tax fees and other non-audit fees are compared in an audit report lag model to determine whether they are the same statistically. Supporting tests for audit quality use discretionary accruals and the reporting of a small profit or small positive change in profit.

This paper finds that different non-audit fees do not have the same effects on report lag and partial support for the implied hierarchy of the Commission. Specifically, for large accelerated filers, audit-related fees and tax fees have the same negative effects on report lag but other non-audit fees are unrelated to report lag. Tests of audit quality suggest that auditors do not compromise audit quality.

Different non-audit services are unique in their spillover effects and deserve individual attention. Audit practitioners could be more comfortable in providing audit-related non-audit or tax services for audit clients since these services could facilitate audit work without compromising independence. On the other hand, they should be cautious about the provision of other non-audit services because the services do not enhance the efficiency of audit work and without such a benefit to audit clients, the provision may create issues of perceived independence.

Insight is limited by the types of disclosure of non-audit fees available and the lack of internal measures of audit efficiency.

The results provide deeper insight into the knowledge spillover theory and prior studies which implicitly assume all non-audit services having the same effect. The results suggest that the services should be regulated each on its own but not in a bundle. Last, this paper provides the first evidence that audit-related non-audit fees reduce report lag.

This study aims to examine the timing of corporate disclosure in the context of Georgia, an emerging market where a recent reform of corporate financial transparency mandated about 80,000 private sector entities to publicly disclose their annual financial statements.

The main analysis covers more than 4,000 large, medium, small and micro private sector entities, for which the data is obtained from the Ministry of Finance of Georgia. This paper builds an empirical model of logit/probit regression, with industry fixed and random effects to investigate the drivers of the corporate disclosure timing.

Findings suggest that the mean reporting time lag is 279 days after the fiscal year-end, that is nine days after the statutory deadline. Almost one-third (30%) of the entities miss the nine-month statutory deadline, while the timely filers almost unexceptionally file immediately before the deadline. Multivariate tests reveal that voluntarily filing entities completed the process significantly faster than those mandated to do so; audited financial statements take more time to be filed, whereas those with unqualified audit opinion or audited by large/international audit firms are filed faster than their counterparts. The author concludes that despite the overall high filing rates, the timing of corporate disclosure is not (yet) efficiently enforced in practice (but is progressing over time), whereas regulatory incentives prevail over market incentives among the timely filers.

To the best of the author’s knowledge, this is the first study that explores corporate disclosure timing incentives in the context of Georgia. This study extends prior literature on the timing of financial information from an emerging country’s private sector perspective, with juxtaposed market and regulatory incentives.

There are three main purposes of this study which are: first, to review the literature on audit report lag (ARL) and its determinants; second, to measure the extent of ARL in a developing country, Egypt; and third, to empirically examine the impact of corporate governance (CG) characteristics on ARL in Egypt.

The literature on determinants of ARL motivated the author to investigate about the impact of CG characteristics and audit‐related characteristics on ARL especially in emerging capital markets, such as the Cairo and Alexandria Stock Exchange (CASE) for a sample (85 companies) of Egyptian listed companies. Further, the study includes explanatory variables relating to CG characteristics, which have not previously been considered (i.e. board independence, duality of chief executive officer (CEO), and existence of an audit committee), that may shed more light on the structure and dynamics of the ARL.

The ARL for each of the 85 listed sample companies ranged from a minimum interval of 19 days to a maximum interval of 115, and Egyptian listed companies take approximately two months on average. A regression analysis indicates that board independence, duality of CEO, and existence of an audit committee significantly affect ARL. But on the other hand, ownership concentration has insignificant affect on ARL. Also, three control variables (company size, industry and profitability) significantly affected ARL. The adjusted R² indicate that 57.10 per cent of the variation in the dependent variable in the regression model is explained by variations in the independent variables.

This study of Egyptian companies listed on the CASE represents the initial comprehensive examination of ARL, and it is consider the first study to provide a thorough examination of the association between CG characteristics and ARL.

This study aims to examine the impact of Financial Accounting Standard Board’s Accounting Standard Update (ASU) 2014–15 on auditors’ going concern reporting. ASU 2014–15 provides accounting guidance for managers related to going concern issues, but there is evidence that regulatory changes affect auditor behavior. The authors examine if auditors’ propensity to issue going concern opinions (GCOs) for non-bankrupt, financially distressed firms changes after ASU 2014–15 became effective, and if the proportion of client bankruptcies with prior GCOs changes after ASU 2014–15 became effective.

The authors examine audit reports for non-bankrupt, financially stressed firms three years before and after the effective date of ASU 2014–15 to see if the propensity to issue a GCO differs in the pre- vs post-period. The authors then examine bankrupt, financially stressed firms to determine if the proportion of bankruptcies preceded by a GCO differs in the pre- vs post-period.

The authors find a significant increase in GCO reporting for non-bankrupt, financially stressed firms in the post-ASU 2014–15 period, suggesting auditor conservatism increased. The propensity for auditors to issue a GCO to bankrupt firms also increased significantly in the post-ASU period, providing evidence that auditors became more accurate, as more bankruptcies were preceded by a GCO than in the pre-ASU period.

This study uses new legislation which creates an exogenous shock to going concern reporting. Models and techniques are combined from prior literature and extended to investigate auditors’ reporting behaviors using two important and distinct samples.

This study aims to examine the impact of COVID-19 public health restrictions on audit fees and audit delay at the auditor local office level.

The authors take advantage of the availability of the state-by-state lockdown data to measure the degree of public health restrictions in auditor office locations. Using multivariate regression analysis, this study empirically investigates the impact of the length of lockdown in auditors’ office locations on audit fees and audit delay. The authors also examine whether office-level characteristics (i.e. office size and office-level client importance) moderate the association between the length of statewide lockdown and both audit fees and audit delay.

The authors find that a longer lockdown in auditors’ office locations is associated with higher audit fees and longer audit delay. The increase in audit fees and audit delay due to lockdown is higher for clients of larger local offices than those of smaller offices. In contrast, the positive impact of lockdown on audit fees and audit delay is less for more economically significant clients of an auditor office than that for less significant clients. Smaller clients are more likely to bear the higher cost of audits and experience longer audit delay during the pandemic.

The results suggest that COVID-19 restrictions have forced auditors to change the nature, scope and timing of their tests, resulting in higher audit fees and longer delays in completing audit engagements. Beyond the main effect of lockdowns on audit fees and audit delay, the study finds evidence of the moderating effect of auditor office size and office-level client importance, providing some insights on how auditor local offices cope with COVID-19 restrictions.

The purpose of this study is to examine whether the timing of auditor terminations signals the riskiness of client firms.

This empirical study uses a sample of auditor switches during 2003-2014 to conduct univariate tests and multivariate regression analyses. Auditor switches occurring after the audit report date but before the shareholders’ meeting are classified as “planned” terminations and auditor switches that occur outside of this window are classified as “abrupt” terminations.

First, abrupt terminations are more strongly related to client risk factors than planned terminations. Second, relative to planned terminations, abrupt terminations are more likely to result from an auditor resignation rather than a client dismissal. Third, abrupt termination firms are more likely to have internal control weaknesses and experience delistings in the following year. Future operating performance is also worse after an abrupt termination. Finally, auditors and investors view abrupt terminations as riskier than planned terminations.

As the timing of the auditor termination is publicly available information, it can provide an important signal of deteriorating financial performance to shareholders and potential investors. Abrupt terminations could be costly to shareholders because those firms likely have lower quality financial reporting (due to internal control weakness) and deterioration of future operating performance.

While concurrent studies investigate the relation between the timing of new auditor appointment and audit quality, this is the first study to document the relation between the timing of auditor termination and the riskiness of client firms.

Most studies looking into completion of the audit cycle, have investigated specific interventions rather than entire projects. This study was carried out to evaluate the successful completion of the audit cycle depending on whether or not recommendations were acted on; and to find out relevant confounding factors. This was a retrospective review of the recommendations of audits between March 1999 and October 2002. There were 29 projects with a total of 63 recommendations. While 24 had been implemented, action had been only initiated in two and was in progress in one. A total of 17 recommendations were still under discussion. There were three types of inaction – no action because of no recommendations (n=8), action no longer appropriate (n=1) and specific obstacles preventing implementation (n=10). There were no significant differences between the outcomes (Chi square=0.128, dF=1, p=0.720). Investigation into the outcomes of audit recommendations is a useful way of assessing the entire audit cycle. However it also throws up a number of contextual issues that can influence outcome and should be taken into account when monitoring change in clinical settings.

The progressive computerization of business processes and widespread availability of computer networking make it possible to dramatically increase the frequency of periodic audits by redesigning the auditing architecture around Continuous Online Auditing (COA). Continuous auditing is viewed here as a type of auditing that produces audit results simultaneously with, or a short period of time after, the occurrence of relevant events. It is arguable that continuous auditing can be implemented only as an online system, i.e., a system that is permanently connected through computer networking to both auditees and auditors. This article proposes a research agenda for the emerging field of COA. First, the history, institutional background, feasibility of and some experiences in COA are briefly reviewed. Thereafter, a number of research issues relating to the architecture of COA, factors affecting the use of COA, and the major consequences of COA are presented. Finally, a selected number of research issues are highlighted as priorities for future research in COA.