Audit committee characteristics and audit report lag in Malaysia

Timeliness of the financial statements is one of the important aspects that concerns the users of information. The delay in publication of corporate financial statements may affect the usefulness of the information. This paper aims to investigate the relationship between the characteristics of audit committee: audit committee independence, audit committee overlap, tenure of chairman of audit committee, expertise of chairman of audit committee, and audit report lag of firms listed on Bursa Malaysia. Data were collected from 139 companies in the financial year 2015. Descriptive analysis was used to provide insight into the time taken by external auditors to complete the audit work. The results show that on average, the companies took about 95 days to complete their audit report with a maximum and minimum day of 122 days and 45 days respectively. In addition, regression analysis was used to provide empirical evidence on which variables had significant relationship with audit report lag. The results show that chairman of audit committee with accounting expertise, audit committee size, frequency of meetings of audit committee, firm size, leverage, and profitability are significantly associated with audit report lag. However, the other five variables: audit committee independence, audit committee overlap, tenure of chairman of audit committee, auditor type and industry type were insignificantly related with audit report lag. This study contributes to the body of knowledge by providing a good indicator of the extent of the application of the proposed law from Securities Commission of Malaysia (The proposed draft code of corporate governance 2016) which suggests that the chair of audit committee should be a person with accounting expertise.