Effect Of Company Size, Profitability, KAP Size, And Auditor's Opinion On Audit Delay (Empirical Study Of Banking Companies Listed On The Stock Exchange 2011 - 2015
Effect of Company Size, Profitability, KAP Size, and Auditor's Opinion on Audit Delay: Empirical Study of Banking Companies on the IDX (2011-2015)
Introduction
Audit delay is a critical issue in the financial reporting process, as it can have a significant impact on investor confidence and company business decisions. The audit delay refers to the period of time between the end of the company's financial year and the date at which the audited financial statements are submitted to the public. This study aims to analyze and provide empirical evidence of the effect of company size, profitability, KAP size (Public Accountant Firm), and auditor's opinion on audit delay, especially in banking companies listed on the Indonesia Stock Exchange (IDX) during the period 2011 to 2015.
Background of the Study
Audit delay is a complex issue that has been studied extensively in the literature. However, the impact of company size, profitability, KAP size, and auditor's opinion on audit delay in banking companies listed on the IDX has not been fully explored. This study aims to fill this gap by providing empirical evidence of the effect of these factors on audit delay.
Methodology
The population taken consisted of 35 banking companies registered on the IDX. The sampling method used was purposive sampling, which produced 20 sample companies for a five-year period with a total of 100 units of analysis. The data used in this study were taken from audited financial statements, independent auditor reports, and company annual reports. Data sources are accessed through the official website IDX, www.idx.co.id. Data analysis techniques used include descriptive statistical analysis, classical assumption tests, and hypothesis tests.
Results
The results of this study indicate that the size of the company, profitability, and KAP size have a significant influence on the audit delay in banking companies listed on the IDX. The company's size refers to total assets, where larger companies tend to have more transactions and complexity, so that it has the potential to extend the audit settlement time. Meanwhile, profitability, measured through financial ratios, shows that more profitable companies can allocate more resources to speed up the audit process.
The Effect of Company Size on Audit Delay
The size of the company is a critical factor that affects audit delay. Larger companies tend to have more transactions and complexity, which can extend the audit settlement time. This is because larger companies have more assets, liabilities, and equity, which require more time to verify and audit. Additionally, larger companies may have more subsidiaries and affiliates, which can increase the complexity of the audit process.
The Effect of Profitability on Audit Delay
Profitability is another critical factor that affects audit delay. More profitable companies can allocate more resources to speed up the audit process. This is because more profitable companies have more resources available to invest in the audit process, such as hiring more auditors or investing in audit technology. Additionally, more profitable companies may have more experienced auditors, which can speed up the audit process.
The Effect of KAP Size on Audit Delay
The size of the KAP is related to the capacity and ability of a public accounting firm in handling audits. Larger KAP usually has more experience and experts that can speed up the audit process. This is because larger KAP have more resources available to invest in the audit process, such as hiring more auditors or investing in audit technology. Additionally, larger KAP may have more experienced auditors, which can speed up the audit process.
The Effect of Auditor's Opinion on Audit Delay
The auditor's opinion also plays an important role in the audit delay. Auditories that provide more complex opinions or question certain numbers in financial statements can cause delays, because it requires more time for verification and completion of existing issues. This is because auditors need to verify and complete the issues raised in the audit report, which can take more time.
Conclusion
Overall, this research provides valuable insights on how various factors can affect audit completion time in banking companies. By knowing these factors, companies can take strategic steps to speed up the audit process, which in turn can increase transparency and trust from investors and other stakeholders. The results of this study indicate that the size of the company, profitability, and KAP size have a significant influence on the audit delay in banking companies listed on the IDX. The auditor's opinion also plays an important role in the audit delay.
Recommendations
Based on the findings of this study, the following recommendations are made:
- Companies should take strategic steps to speed up the audit process, such as hiring more auditors or investing in audit technology.
- Companies should allocate more resources to the audit process, such as investing in audit technology or hiring more experienced auditors.
- KAP should invest in more experienced auditors and invest in audit technology to speed up the audit process.
- Auditors should provide more clear and concise opinions to avoid delays in the audit process.
Limitations of the Study
This study has several limitations. Firstly, the study only focused on banking companies listed on the IDX, which may not be representative of all companies. Secondly, the study only used data from 2011 to 2015, which may not be representative of the current market conditions. Finally, the study only used descriptive statistical analysis, classical assumption tests, and hypothesis tests, which may not be sufficient to capture the complexity of the audit delay issue.
Future Research Directions
Future research should focus on exploring the impact of other factors on audit delay, such as the impact of corporate governance on audit delay. Additionally, future research should focus on exploring the impact of audit delay on investor confidence and company business decisions. Finally, future research should focus on exploring the impact of audit delay on the quality of financial reporting.
Q&A: Effect of Company Size, Profitability, KAP Size, and Auditor's Opinion on Audit Delay
Q: What is audit delay and why is it important?
A: Audit delay refers to the period of time between the end of the company's financial year and the date at which the audited financial statements are submitted to the public. It is an important issue because it can have a significant impact on investor confidence and company business decisions.
Q: What are the factors that affect audit delay?
A: The factors that affect audit delay include company size, profitability, KAP size, and auditor's opinion. These factors can influence the speed and complexity of the audit process.
Q: How does company size affect audit delay?
A: Larger companies tend to have more transactions and complexity, which can extend the audit settlement time. This is because larger companies have more assets, liabilities, and equity, which require more time to verify and audit.
Q: How does profitability affect audit delay?
A: More profitable companies can allocate more resources to speed up the audit process. This is because more profitable companies have more resources available to invest in the audit process, such as hiring more auditors or investing in audit technology.
Q: How does KAP size affect audit delay?
A: Larger KAP usually has more experience and experts that can speed up the audit process. This is because larger KAP have more resources available to invest in the audit process, such as hiring more auditors or investing in audit technology.
Q: How does auditor's opinion affect audit delay?
A: Auditories that provide more complex opinions or question certain numbers in financial statements can cause delays, because it requires more time for verification and completion of existing issues.
Q: What are the implications of audit delay on investor confidence and company business decisions?
A: Delay in the issuance of audit reports can have a negative impact, such as reducing investor confidence and influencing company business decisions.
Q: What are the recommendations for companies to speed up the audit process?
A: Companies should take strategic steps to speed up the audit process, such as hiring more auditors or investing in audit technology. Companies should also allocate more resources to the audit process, such as investing in audit technology or hiring more experienced auditors.
Q: What are the limitations of this study?
A: This study has several limitations. Firstly, the study only focused on banking companies listed on the IDX, which may not be representative of all companies. Secondly, the study only used data from 2011 to 2015, which may not be representative of the current market conditions. Finally, the study only used descriptive statistical analysis, classical assumption tests, and hypothesis tests, which may not be sufficient to capture the complexity of the audit delay issue.
Q: What are the future research directions?
A: Future research should focus on exploring the impact of other factors on audit delay, such as the impact of corporate governance on audit delay. Additionally, future research should focus on exploring the impact of audit delay on investor confidence and company business decisions. Finally, future research should focus on exploring the impact of audit delay on the quality of financial reporting.
Q: What are the practical implications of this study?
A: The practical implications of this study are that companies should take strategic steps to speed up the audit process, such as hiring more auditors or investing in audit technology. Companies should also allocate more resources to the audit process, such as investing in audit technology or hiring more experienced auditors. Additionally, auditors should provide more clear and concise opinions to avoid delays in the audit process.
Q: What are the policy implications of this study?
A: The policy implications of this study are that regulatory bodies should consider the impact of audit delay on investor confidence and company business decisions. Regulatory bodies should also consider the impact of audit delay on the quality of financial reporting. Additionally, regulatory bodies should consider the impact of KAP size on audit delay and take steps to ensure that KAP have the necessary resources and expertise to perform audits efficiently.