The Impact Of Abnormal Audit Report Lag On Audit Quality

The deadline of disclosure of annual reports for Listed Companies in China is 120 days after the date of balance sheet,which result in almost the longest financial report lags of the world.Audit report lags are defined as the period of time between the date of the audit report and the date of balance sheet,they are related to the amount of work performed in the audit engagement.Audit report lags consist of two parts:one is normal audit report lags,which reflect necessary amount of work performed in the audit engagement;the other is abnormal audit report lags,which is defined as actual audit report lags minus normal audit report lags.Abnormal audit report lags are related to the amount of work which exceed normal amount of work,so it is worth paying attention to the effectiveness of the amount of work performed in the audit engagement.In this paper,we examined the effects of the abnormal audit report lags on audit quality.There are two parts in this paper:in the first part,we got abnormal audit report lags,in another part,we examined the effects of the abnormal audit report lags on audit quality using abnormal audit report lags in the first part,and examined if audit fees and auditor industry expertise influence association between abnormal audit report lags and audit quality.The results shows that as abnormal audit report lags increase,audit quality declines,which suggests that abnormal work is invalid.This kind of abnormal condition suggests that there are some factors harming effectiveness of work performed in the audit engagement.In the following study,we found that when auditor expertise is lower,it will contribute to a positive association between abnormal audit report lags and audit quality.When auditor expertise is lower,it takes more time for auditor to finish work and audit quality is low.Besides,high audit fees contribute to a negative association between abnormal audit report lags and audit quality.It may be caused by economic dependence so auditors may work less during the audit engagement.