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The usefulness of published corporate reports depends on their accuracy and their timeliness. As early as 1954, it was recognized that one of the essential elements of adequate disclosure was timeliness of reporting as first considered by the American Accounting Association (AAA, 1954). Past experience in capital markets shows that timeliness critically affects the investors’ chance of being defrauded, with respect to capital markets, disclosing information regarding company activities is the primary element that ensures efficacy of capital markets (Celik, 2002). Submission of activities as well as information regarding result of activities by companies to shareholders in a complete and correct manner is important for permanency of economy and maintaining welfare of individuals. Active data flow in economy mainly depends on accounting information disclosed to public and thus on financial statement (Cilik, 2003).

Therefore, it is not surprising to see policy maker expressing concern about the timeliness of disclosures (FASB 1980 and SEC 2002).

However, the safeguard against misstatements provided by audit requirements seems to contradict the concept of reporting timeliness. Kathari and Robin, (2000) found that companies in jurisdiction that have a strong shareholder orientation tend to disclose earnings information sooner than companies in countries operating under a legal code system. If information is released sooner, the effect on stock prices is more pronounced. The longer the time lapse between year-end and the release of the financial information, the less effect there is on stock price, all other things being equal. However, it is not possible to release annual reports unless it is certified as true and fair by professional chartered accountants. Put differently, one of the most tangible reasons for the late publication of annual reports by public limited companies is that accounts need to be audited before they can be published. Time lag in financial report publication and audit delay are intertwined and used interchangeably in reporting literature. As a result, in most cases timeliness has actually dealt with audit delays.

In other words, Gigler and Hemmer (2001) discuss this point in their study, which finds that firms with more conservative accounting systems are less likely to make timely voluntary disclosures than are firms with less conservative accounting systems.

Iman et al 2001 focus on possible association between audit delay and audit firms’ international links a proxy for audit quality. They find that auditors with international links take longer to complete than their unaffiliated peers. Soltani (2002) suggest that it takes longer time to release audit reports where there had been a qualified opinion, and that the more serious the qualification, the greater the delay in releasing the report. Internal reporting theory suggests that administrators deal with internal performance evaluation. If company performance evaluation is assumed to be related to profit performance, administrators at various stages are in tendency to delay internal reporting of bad news in company until accuracy of such are restated (How vd, 2000).

Company features are also have effect on reporting delays. Besides timing of financial reporting and the inverse relationship between good news and bad news, other variables affecting timing of reporting are: size of company, complexity of activities, industry type and efficacy of internal control system. However, Leventis and Weetman (2004) conclude that industrial differences have effect on disclosing timing. Stergios, Pauline and Constantinos (2000) found a statistically significant association between audit report lag and type of auditor, audit fees, number of remarks in the audit report, the presence of extraordinary item and an expression of uncertainty in the audit report. Bruce, Dewayne and Jon (2006) suggest that lack of sufficient personnel resource, both with the client and the audit firm hindered a significant reduction in prior audit report lags. Afify, (2009) suggest that the inclusion of two new company characteristics (profitability and multinationality of the companies) which have not been considered in prior research.

The purpose of the present study is to provide further evidence on the determinants of audit delay using data from the Nigeria Stock Exchange. The motivation of this study is derived from long standing problem of a lack of a timely provision of corporate financial report in Nigeria.


There is no doubt that in recent years, an avalanche of companies both private and public limited companies have published their audited financial statements as stipulated in Companies and Allied Matters Act (CAMA 2004) as amended. But suffice it to mention that these audited financial statements are published much later than necessary. The question that proceeds from the foregoing is whether the delay in the disclosure of the audit report will enable the investors to make informed and timely investment decisions. The primary problem of this study therefore is: why are there delays in audit? and whether such delays can be avoided by imposing some penalties/charges on the auditors and administrators of the company?

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NAME:                       TITUS AYANI SOLA
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Updated: July 9, 2018 — 6:23 am

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