Financial statements’ timeliness is critical to its usefulness as users’ decision-making process is widely influenced by the recency of the report. Following the unprecedented COVID-19 outbreak, auditors’ ability to complete audit on time has been hampered significantly. In response to the delay triggered by the pandemic.
Objective
The objective of this study is to investigate the relationship between investment and outsourcing of internal audit functions and audit report lag across Malaysian public listed companies.
Design/Methodology/Approach
The sample size for this study focuses on sample companies with financial year-ends in December 2019, and based on the annual report of 315 publicly listed companies on the Bursa Malaysia website.
Results
According to the findings of this study, greater internal audit investment and outsourcing internal audit functions reduce audit report lag. This can be taken into consideration by firm to ensure audit lag can be minimised through investment and outsourcing of audit functions.
Originality/Value
These findings can be taken into consideration by firm to ensure audit lag can be minimised through investment and outsourcing of audit functions.
Research Limitations/Implications
Notably, the Bursa Malaysia listing requirements has made it compulsory for the public listed companies to disclose their internal audit sourcing arrangement (in-house or outsourced) and the cost incurred in the financial statement. Therefore, it is save to conclude that a study on internal audit outsourcing is relevant and may contribute to new developments in the area of study.
Practical Implications
Taking into consideration the proposition made by Bursa Malaysia in encouraging public listed companies to issue their annual audited financial statements within a shorter time frame as possible, which is in line with the developed countries such as the United States, Canada, Australia, and Hong Kong, the present study attempts to assess the status of the audit report lag among the public listed companies in Malaysia. It is deemed that the findings of the present study may enhance early corporate reporting and, thus, may provide evidences to authorities in making it mandatory to all public listed companies in Malaysia to reduce the financial reporting time to 90 days.
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