Audit Delay

Pg1Pg1 world-wide Bulletin of Business Administration ISSN 1451-243X national 10 (2011) EuroJournals, Inc. 2011 http//www. eurojournals. com spatevas Report Lag and the Effectiveness of canvas perpetration Among Malayan Listed Companies Ummi Junaidda Binti Hashim Universiti Sultan Zainal Abidin E-mail emailprotected edu. my Tel 609-6653760 Fax 609-6669220 Rashidah Binti Abdul Rahman report Research convey, Universiti Teknologarithmi mara Shah Alam E-mail emailprotected uitm. edu. my Tel 603 55444745 Fax 603 55444921 Abstr influenceThe purpose of this reading is to boast got the link amid scrutinise citizens delegation characteristics and squeeze outvass newspaper publisher retrogress among 288 companies listed at Bursa Malaysia for a trey twelvemonth full stop from 2007 to 2009. The characteristics of analyze commissioning examined atomic turning 18 theater of operations perpetration indep prohibi exce, size uped account mission diligence and scrutin ise deputation expertise. In this teaching, fasten on stock key lag refers to the calculate of long time from the fellowship? s appoint obliterate ( m wiztary year) to the hear of analyzeor? s get over. The results of this study say that examine bill lag for the listed companies in Malaysia ranges from 36 age to 184 age for the whizz-third year period.The results of this study similarly attest that canvass delegation independency and canvass direction expertise could see in decrease size up cut through lag among companies in Malaysia. This study however could non provide any testify on the link mingled with scrutinize military commission diligence on analyse cross lag. Overall, the findings in this study provide some certainty reinforcement the resource based theory, whereby characteristics of the canvas commissioning as the resources and capabilities could rectify companies? performance as considerably as corporeal insurance coverage . Keywords examine Committee, Audit Report Lag 1.Introduction Financial make-uping in general will provide mapful information and assist users in end making as capacity of capital providers in companies. Particularly users rely on the studyed pecuniary embraces in their assessment and evaluation of companies? performance. The studyed m unrivalledtary fibs will augment its reliability and users will feel p ternion on the reports verified by the scrutiniseors and would be able to make decision wisely (FASB, Concepts Statement 2). seasonableness itself will fire the usefulness of the information. on that point are many ways to define seasonableness.Commonly known that timeliness is the report balk from the corporation? s accounting year end to the date of the scrutinise report completed (Chambers and Penman, 1984). Audit report lag would forego the shareholders and potential shareholders to postpone their transaction on shares (Ng and Tai, 1994). This in turn, would provide prohibit payoff to the club. 50 Pg2Pg2 Bursa Malaysia1 has demanded for timely pecuniary reporting with the furnish of Chapter 2 and Chapter 9 of the leaning Requirements (2009), Bursa Malaysia Securities Berhad.Bursa Malaysia inclination fatality under chapter 9. 23 (a) provides that a public listed companies must(prenominal)(prenominal) submit its annual report to Bursa Malaysia at bottom six months after the company? s year end. To prevent companies from deep submission of their scrutinizeed financial reports, Bursa Malaysia in consultation with Securities Commission has imposed penalisation to public listed companies for failure to disclose the material facts much(prenominal)(prenominal) as the annual report within the time frame. However, despite the penalty being imposed, at that place are companies that could non put up the submission deadline.This current scenario as account in Bursa Malaysia website 2010 (www. bursamalaysia. com). Many professional and regulatory bodies bewilder taken diverse actions to identify the factors that hinder companies in delaying the submission of financial reports. Bursa Malaysia highlighted that incarnate brass mechanisms which is visit citizens perpetration would play a significant role in the company to hold that the objective of Bursa Malaysia on timely reporting can be achieved. The amended Bursa Malaysia Listing requirement in 2009 provides that the appendages of audit military commission must not be little than 3 persons.All shares of the audit perpetration must be non-executive directors, with a legal age of them being autarkical directors and at least one extremity is a member of the Malaysia Institute of Accountants (MIA). If the member of the audit military commission is not a member of MIA, the member must chip in at least three years of working eff. Malaysian Government has recommended Malaysian Code on Corporate Governance (MCCG, 2000) which was afterwa rds revised in 2007. The revised code recommends that member of audit direction to comprise of fully non-executive directors, be able to read, analyse and interpret financial instructions.This is to ensure that they would be able to efficaciously discharge their acts. Since audit commission has a close working kindred with foreign auditors, the audit direction would able to assist the level of audit coverage and assurance. This could be make by employing experienceable members in the audit mission (Abbott et al. 2003), thus, would modify timeliness and go down audit report lag. Past studies that support examined the determinants of audit report lag among companies focused only on company? specialized variables such as company size, (Al-Ajmi, 2008), profitability (Ahmad and Kamarudin, 2003), year end (Ahmed, 2003) leverage (Owusu-Ansah and Leventis, 2006), attention type (Jaggi and Tsui, 1999), audit opinion (Ng and Tai, 1994), and type of auditor (Afify, 2009). How ever, these studies did not examine embodied presidential term mechanisms in intercourse to audit report lag. Afify (2009) and Tauringana (2008) examined the jounce of corporate presidential term mechanisms on audit report lag. Both studies were conducted in a non-Malaysian setting.Within the Malaysian context, studies that have examined the emersion of timeliness using pixilated? s specific variable embroil those by Ahmad and Kamarudin (2003) and Che-Ahmad and Abidin (2008). These two studies did not examine the issue of timeliness in relation to corporate politics mechanism. The current study extends the corporate governance literature by examining the issue of timeliness of annual reports in the Malaysian market by incorporating corporate governance, house? s specific variables in relation to audit report lag.The aim of the current study is to examine whether the existence of audit commissioning could assist in reducing audit report lag. Such trial run is of import s ince the audit literature has identified the role of audit commission in reviewing the financial statement. This study aims to answer the by-line research foreland ? Could audit mission play an significant role in legally monitor the timeliness of audit report? This study contributes to the corporate governance and audit literature by examining association of corporate governance audit committal and the audit report lag.The findings of the study would have policy implications for MCCG. It provides supporting evidence on whether the development of corporate governance could significantly increase the timeliness of annual reports among companies in Malaysia. This study could assist Malaysian Institute of Corporate Governance 1 Bursa Malaysia was previously known as Kuala Lumpur assembly line Exchange. 51 Pg3Pg3 (MICG) to provide best practice in order to enhance corporate governance mechanisms. The findings could also assist external auditors in evaluating the persuasiveness of the audit perpetration in their audit planning.Such assistance would assist the external auditors in identifying the best time to be allocated for their audit engagements in terms of essay such as whether to reduce or increase effort and the amount of fees to be charged. The remainder of the paper is organized as follows. First, it discusses on literature review and hypotheses development. Next, it describes on research design to conduct the study. It hike up provides the results of the outline and discussion. The final part concludes and provides suggestions for hereafter research. 2. Literature Review and Hypotheses DevelopmentWithin the corporate governance mechanisms, audit committee plays an important role in the observe process as well as its reporting role in companies. These members would reduce auditors? t bring complexity and increase timeliness. Therefore, arguably, audit committee would be able to reduce audit report lag. This is because the appointment of au dit committee are in line with the agency theory (Jensen and Meckling 1976) where agents act on behalf of principles in ensuring the company is performing well and provides calibre annual reporting.The following sections develop three hypotheses to meet the objectives of the study which are related to the characteristics of audit committee. 2. 1. Audit Committee Independence According to the agency theory, the in open members in audit committee could help the principals to monitor the agents? activities and reduce benefits from withholding information. This is because audit committee with much than unconditional directors is considered as being a more reliable group other than board of directors in monitoring the company.The effective role provides by audit committee would be appropriate to nominate the rights and privileges for all stakeholders. An independent audit committee enhances the effectiveness of monitoring social occasion since it serves as a reinforcing agent to th e independence of inner and external auditors in a company. Menon and Williams (1994) posits that an audit committee must comprise entirely of independent directors in order to be more effective. Klein (2002) assigns that independent audit committees reduce the likelihood of earnings focusing, thus improving transparency.Carcello et al. (2000) put in that audit committee independence have positive significant relationship with audit fees. This provides evidence that independence of the audit committee would lead to higher quality of financial report. Further, Ismail et al. (2008) effect that the independence of audit committee would not influence the quality reporting of the companies. They argue that this is due to the companies only run acrossing the requirements, alternatively than the impact of the requirements. In contrast, Ali Shah et al. 2009) found that companies in Pakistan are having good corporate governance through having independence of audit committee. Bursa Mala ysia Listing requirements (2009) and MCCG (2007) have highlighted that the audit committee top executive institute stronger internal temper and good monitoring of financial reporting process in a company. The strong internal curtail managed by audit committee would lead to auditors reducing their work on the company? s accounts because of their reliance on the internal control of the company. This would subsequently lead to the decrease in audit delay.Therefore, the first hypothesis is developed. H1 There is minus relationship mingled with the audit committee independence and audit report lag. 52 Pg4Pg4 2. 2. Audit Committee Diligence Ismail et al. (2008), measure audit committee diligence based on actual number of audit committee conflicts held in a year. Audit committee meetings are considered as an important tool in ensuring audit committee members are fulfilling their responsibilities towards the company. Audit committee must carry out activities effectively through increa sed frequency of meetings in order to maintain its control functions (Bedard et al. 2004). Abbott et al. 2000) in their examination found that audit committee that meets at least twice annually is subjected to less exposure of sanction by the authorities. This is because regular meetings conducted would bear witness that the audit committee discharges their duties in a well manner as an agent in the company. They also tell that audit committee that is wholly independent is also active by way of having meetings. Dechow et al. (1996) argue that audit committee is an constitutional part of a company that emphasises high level monitoring. Moreover, the monitoring function would be more effective in terms of financial reporting.American prohibit Association posits that an audit committee which holds less than 2 meetings annually is considered not committed to their duties. This indicates that the audit committee is unable to contribute to the internal control in that situation. audi tors who really monitor the internal control function of the company would reduce their works. However, Ismail et al. (2008) found that frequency of audit committee meeting could not influence the quality reporting of the companies. They argue that this is due to the companies only fulfilling the requirements, rather than the impact of the requirements.Razman and Iskandar (2004) found Malaysian companies that have good reporting meet more frequent than poor reporting companies. This is because, during the meeting, they can monitor the focusing activities. Of consequence, this will lead to the decrease time taken on auditing by the auditors and reduce the reporting lag. Therefore, following hypothesis is developed. H2 There is negative relationship surrounded by audit committee diligence and audit report lag. 2. 3. Audit Committee Expertise Audit committee expertise is important in order to deal effectively with external auditors.This is because audit committee typically acts as th e mediator between the precaution and the auditors. DeZoort et al. (2003) note that audit committee members with experience in financial reporting and auditing especially those who are CPAs would make auditors? tasks and responsibilities. They would become more supportive of the auditors compared to audit committee members who do not have similar experience. Audit committee members who are experts are more ? friendly? with the auditors, comprehensible, logical and coherent when they are discussing with the auditors regarding the financial reporting of the company.Audit committee with more expertise would be more concerned about the financial reporting quality of the company. DeZoort (1998) contends that an audit committee with more internal control experience makes decisions or judgments similar to auditors compared to those audit committee members who are without experience. This reflects that experience in the accounting, internal control or auditing is fundamental to enable the audit committee to understand and cater on the problematic issue on the financial reporting system of the company. They would also realise the benefits of producing financial statement on time at the market.It is also identified that audit committee with financial expertise are going to facilitate all(prenominal) other. As discussed in resource based theory, the resources and capabilities that audit committee posses with financial expertise may assist in improving the debauched performance. Listed companies in Malaysia that have financial literate members of audit committee would have ability to end up with good financial report (Razman and Iskandar, 2004). This is because audit committee who has knowledge in accounting and auditing is able to demonstrate their ability in monitoring of internal control and reporting.Strong internal control also would lead the auditors in 53 Pg5Pg5 reducing their work because of their reliance on the credibility of the internal control. Therefore , the following hypothesis is developed H3 There is negative relationship between the audit committee expertise and the audit report lag. 3. Research contrive Sample covered in this study are among 288 companies listed at Bursa Malaysia for three years from 2007 to 2009. The stresss are chosen randomly from 806 of the population. add-in 1 wide-cut number of companies and sample based on industry IndustryPopulationSample of companiesPercentConstruction49197 Consumer1395318 Hotel521 Industrial2658830 Infrastructure731 Property883111 Plantation43166 Technology29124 Trading & services1816422 TOTAL806288100 The companies listed at Bursa Malaysia are selected for this study because they are governed by the rules and regulations imposed by MCCG and Bursa Malaysia Listing Requirements. The companies selected include consumer, industrial products, trading and services, construction, infrastructure, hotel, property, technology and plantation. tabulate 1 provides the number of companies s elected from each of the sector.There are seven operational variables which comprise of one dependent variable, three independent variables and three control variables as describe in card 2. Table 2 Variables Measurements VariablesDefinition Dependent ARLAudit report lag nonparasitic ACINDAC independence ACMEETAC meeting (ACdiligence) ACEXPAC expertise (AC experience) hold sizeCompany size AUDIT TYPEType of audit firm PROFProfitability Measurement Represents the number of days elapsing between the end of the fiscal year of the company to the completion of the audit for the current year for each individual firm (the audit report date)Percentage of non-executive directors to the nitty-gritty of audit committee members Number of audit committee meeting No of audit committee member with priming experience in financial reporting (such as MIA,MICPA) to the innate of audit committee members. Natural log of year end total assets Dummy variable, ? 1? if auditor is one of the former Big -4 audit firms, ? 0? otherwise PROF = Return on asset, measured by net income split with total assets 54 Pg6Pg6 4. Results 4. 1. Descriptive Statistic Table 3 Descriptive Statistics for Audit Report Lag (N= 288) YearNMinimumMaximumMeanMedian 2007ARL28840. 00184. 00103. 14110. 50 008ARL28840. 00146. 00103. 42111. 00 2009ARL28836. 00136. 00102. 46110. 00 2007- 2009ARL86436. 00184. 00103. 00111. 00 Notes ARL = number of days between the end of the fiscal year to the date of completion of audit As shown in Table 3, the mean bill of audit report lag for the pooled sample is 103 days with a maximum and minimum days of 184 and 36 respectively. This indicates that on average, the companies took 103 days to complete their audit report. Using the pooled sample from period from period 2007 to 2009, the results indicate that the companies did comply with Bursa Malaysia listing requirements and he Companies act where they submit their report within six months except for one company which took 184 days to submit the report. It shows that companies are improving over the years on the number of days taken to complete the annual reports. The results of this study are somewhat similar to Afify (2009) that found the maximum and mean score number of days to complete the annual report was 115 days and 67 days respectively. The results indicate that the number of days that the companies took to complete the audit report has reduced from 2007-2009 by 48 days. Results on previous study show relative difference with the current study.Che-Ahmad and Abidin (2008) found that 442 days while Ahmad and Kamarudin (2003) display 273 days on the maximum of days to complete the annual report. Table 4 Number of companies and audit report lag for 2007 2009 Audit report lagNo. ofNo. ofNo. of ARL (within)companiescompaniescompanies Year / percentage2007Percent2008Percent2009Percent 1 month (30 days)00. 0000. 0000. 00 2 months (60days)227. 64206. 94258. 68 3 months (90days)4214. 584114. 244114. 24 4 months (120days)19868. 7521173. 2620872. 22 5 months (150days)258. 68165. 56144. 86 6 months (180days)00. 0000. 0000. 00More than 180days10. 3500. 0000. 00 Total288100288100288100 Table 4 shows that for the three year period, no company has completed and submitted their annual report within a month. The results also show that for the three year period, 41 to 42 companies have completed and submitted their annual report within 3 months. None of the companies have submitted their audit reports exceeding 6 months except for one company which managed to submit their audited report only after 184 days in year 2007. The results in Table 4 shows that nearly companies reports way in advance the date stipulated by Chapter 9 (9. 3a) of Bursa Malaysia Listing Requirement that the annual report shall be issued and submitted within a period not exceeding 6 months from the financial year end of the company. Such results indicated that the companies are concerned and realise that audited r eports are useful for users? 55 Pg7Pg7 decision-making. The results support the notion that excessive delay in publishing financial statements would increase uncertainty in relation to investment decisions(Ashton et al. 1987 Ahmad and Kamarudin, 2003). Table 5 Descriptive statistic for Audit Committee Characteristics and Control VariablesIndependent VariableNMinimumMaximumMeanMedianStd. Deviation ACIND8640. 601. 000. 931. 000. 18 ACDIL8641. 0012. 004. 845. 001. 67 ACEXP8640. 001. 000. 400. 330. 19 Control variable SIZE TOTASSET (RM BILLION)8649 -336. 640. 790. 242. 86 TYPEAUD864010. 580. 000. 49 PROFITABILITY864-1. 8811. 0590. 030. 030. 40 Notes ACINDP= percentage of non-executive directors to the total of audit committee members ACDIL= number of audit committee meeting ACEXP= no of audit committee member with background experience in financial reporting TOTASSET= total assets that the companies have at the end of the financial year.TYPEAUD= ? 1? if audited by Big-4, ? 0? if otherwi se PROFITABILITY= net income divided up with total assets Table 5 presents the characteristics of the audit committee among the listed companies. The results show that audit committee independence (ACIND) has a mean score 93 percent. The results also show that the listed companies minimum score of 60 percent of their audit committee member being correspond by independent directors. The results indicate that the companies comply with the Bursa Malaysia listing requirement (2009) which requires a company to have majority of the audit committee members being ndependent directors. Although the requirement of Bursa Malaysia on the number of independent directors in a board of directors is varied from MCCG? s (2007) requirement, the requirement of Bursa Malaysia listing requirement prevails MCCG? s requirements2. Table 5 also presents the results on the number of meetings held by the audit committee. The results show that almost all audit committee in the listed companies discharge th eir duties appropriately in which on average 5 meetings were being held.The highest number of meeting held by the audit committee during the three year period was 12 times. MCCG (2007) provides that companies should have their audit committee meeting at least 4 times a year. Table 5 also shows the mean score of audit committee expertise (ACEXP) as 0. 4 (40 percent). Such results indicate that most audit committee in the listed companies have audit committee members with experience in financial reporting. Only 24 of the companies (2. 78 percent) formed their audit committee with members not having accounting qualification.The later results did not comply with requirements of Bursa Malaysia listing requirements and MCCG that states at least one member of the audit committee must fulfill the financial expertise requisite. In fact, two companies for the three year period have yet to comply with the requirement to have one of the audit committee members? with financial expertise. 4. 2. Correlation hyaloplasm Analysis Table 6 shows a non-significant value (0. 333) which is more than 0. 05, indicating selective information normality. Based on Kolmogorov-Smirnov and Shapiro Wilk tests, this study concludes that audit report lag is normally distributed. MCCG (2007) provides that, all members of the audit committee should be non-executive directors. 56 Pg8Pg8 Table 6 Normality assay for Audit Report Lag Kolmogorov-SmirnovaShapiro-Wilk StatisticdfSig. StatisticdfSig. NARL0. 0348640. 0210. 9988640. 333 a. Lilliefors Significance Correction Table 7 shows no correlation problem among the variables since the value is less than 0. 5. The variance ostentatiousness factor (VIF) indicates all variables have a value below two which is within the acceptable range of 10. Table 7 Correlation Matrix Table ARLACDILACINDACEXPLog_AssetTYPEAUDROA ARL1 ACDIL0. 096**1 ACIND-0. 68*0. 0301 ACEXP-0. 0190. 0220. 0131 LOG_ASSET-0. 170**0. 093**0. 078*-0. 0031 TYPE AUD-0. 170**-0. 088**0. 01 0-0. 0210. 195**1 ROA-0. 076*0. 0330. 029-0. 032-0. 0210. 0061 **Correlation is significant at the 0. 01 level (2-tailed). * Correlation is significant at the 0. 05 level (2-tailed) Notes ACINDP= percentage of non-executive directors to the total of audit committee members ACDIL= number of audit committee meeting ACEXP= no of audit committee member with background experience in financial reporting LOG_ASSET= natural log of total assets (in billions of ringgit Malaysia) TYPEAUD= ? 1? f audited by Big-4, ? 0? if otherwise ROA= net income divided with total assets 4. 3. Fixed Panel statistical regression This section presents the results of the fixed jury regression using Eviews. The display board data analysis is an increasingly habitual form of longitudinal data analysis among social and behavioral learning researchers (Hsiao, 2003). A panel is a cross-section or group of nation who are surveyed periodically over a given time period. In this study, the group is the listed compa nies selected and the time is the duration of the data collected, which is the three year period of 2007 until 2009.Since the data is bound to be heterogeneity, the panel data technique could take such heterogeneity explicitly into account by allowing individual specific variables (Gujarati, 2003). Normal regression does not adjust firm? s specific effect which would lead to variables being omitted and mis-specified the nonplus (Fraser et al. 2005). Fixed effect model could overcome such problem by adjusting the effects through firm? s specific intercept by capturing immeasurable firm? s specific characteristics (Fraser et al. 2005). Panel data provides more informative of data, variability and efficiency.Under the panel data, the model is generated as follows ARL = 1ACINDP + 2ACMEET + 3ACEXP + 4SIZE+ 5AUDTYPE + 6PROF + it Table 8 Fixed Panel atavism Result VariableCoefficientProb. ACIND-0. 0217060. 001* ACDIL-0. 0098350. 899 ACEXP-0. 0400840. 001* LOG_ASSET-0. 1297820. 012* ROA-0. 0021460. 264 TYPEAUD0. 0025350. 294 C5. 7867340. 000 N864 57 Pg9Pg9 Table 8 Fixed Panel Regression Result continued Adjusted R-squared0. 802562 F-statistic12. 811 Prob(F-statistic)0. 000 Notes ACINDP= percentage of non-executive directors to the total of audit committee members ACDIL=number of audit committee meetingACEXP= no of audit committee member with background experience in financial reporting LOG_ASSET= natural log of total assets (in billions of ringgit Malaysia) TYPEAUD= ? 1? if audited by Big-4, ? 0? if otherwise ROA= net income divided with total assets Adjusted R2= adjusted R2 coefficient determination F stat= indicate how much variation is explained by the regression equation. *significant at 1%. Table 8 shows that the audit committee independence (ACINDP) and audit committee expertise (ACEXP) are significant at 1% level. Thus, accepting hypotheses one and three respectively.On the other hand, the results show that there is no relationship between audit committ ee diligence and audit report lag. Therefore, hypothesis two is rejected. The results indicate that audit committee independence and audit committee expertise may reduce on audit report lag but audit committee diligence could not influence audit report lag. Carcello et al. (2000) found that audit committee independence and audit committee expertise have significant relationship with audit fee while audit committee diligence did not provide any relationship on audit fees.The results in this study shows significant relationship between audit independence and audit report lag which is similar to Klein (2002) that found that more independent audit committee members would effectively influence financial reporting quality. The results of this study support the view that audit committee with a simple majority of independent audit committee members are more likely to fulfill its duties effectively compared to an audit committee members that have no independent audit committee members.This i s consistent with agency theory where independent members in an audit committee could assist principals to monitor the agents? activities and reduce benefits from withholding information. They would have had provided more effective roles in monitoring the companies. Further, the number of financial experts on audit committee will reduce incident of pseudo (Farber, 2005). A member with financial expertise demonstrate a high level of financial reporting knowledge and thus expected to lead the committee, identify and ask knowledgeable questions that challenge management and external auditor (He et al. 009). In practice, it is a general belief that more meeting and discussion of the committee would improve the performance of the company. However, similar to the study done by Uzun et al. (2004), the results in this study show that the number of audit committee meeting held is not significantly associated with audit report lag. More frequent meeting that the company has does not necessar ily provide better achievement to the companies. Thus, the company needs to ensure audit committee member raised and resolved issues with management during the meeting, and as a result improve the quality of reporting. . Conclusion The results of this study show that audit committee characteristics audit committee independence and audit committee expertise contribute as important factors that affect audit report lag of the companies. Such results correspond to the resource based theory where those characteristics of audit committee as the resources and capabilities that may improve companies? performance as well as on the corporate 58 Pg10Pg10 reporting.These two characteristics represent the Bursa Malaysia listing requirement that require audit committee compose of not less than 3 members with majority of them being independent directors and requires at least one member of the audit committee to have financial expertise requisite. Audit committees with those characteristics could assist the companies to be timely in their annual reporting. Finally, this study could not find significant link between audit committee meeting to audit report lag.This study suggests that audit committee could prioritise important things that need to be resolved during the meeting in order to improve the performance of the company as well as in ensure audit report lag. This study is not without limitations. This study does not include other factors such as government policy or semi semipolitical issue that also might affect audit report lag. McGee (2007) noted that the influence of timeliness might be attributed by culture, political and sparing system of the country.Secondly, covering a bigger sample would provide great generalization on the Malaysian listed companies on audit report lag and corporate governance characteristics. Finally, this study only covers a three year period from 2007 until 2009. A longer period such as ten year period data would be more interesting as i t can show the trend on audit report lag. For future research avenues, a possibility is to examine other corporate governance mechanisms characteristics of board of directors in assuring audit report lag.Future research can also examine which parties are liable for the delay of annual report, each on the hands of the preparers or auditors. References 1 Abdul Rahman, R. and Mohamed Ali F. H. , 2006. ? Board, audit committee, culture and earnings management Malaysian evidence?. Managerial Auditing Journal, 21 (7), 783-804. 2 Abtott, L. J. , Parker, S. , Peter, G. F and Raghunandan, K. , 2003. ? The association between audit committee characteristics and audit fees?. Auditing A Journal of serve & Theory, Vol. 22 (2, 17-32. 3 Abbott, L. J. and S. Parker. , 2000. ?Auditor selection and audit committee characteristics?. Auditing A Journal of Practice and Theory. 19 (2), 47-66. 4Afify, H. A. E. ,2009. Determinants of audit report lag Does implementing corporate governance have any impact ? Empirical evidence form Egypt. Journal of apply Accounting Research, 10(1), 56-86. 5 Ahmad, R. A. R. and Kamarudin, K. A. , 2003. ? Audit delay and the timeliness of corporate reporting Malaysian evidence?. Working paper, MARA University of Technology, Shah Alam. 6 Ahmed, K. , 2003. ? The timeliness of corporate reporting a comparative study of South Asia?.Advances in International Accounting, 16, 17-43. 7Al-Ajmi, J. 2008. ? Audit and reporting delays Evidence from an emerging market?. Advances in Accounting, Incorporating Advances in International Accounting, 24, 217- 236. 8Ali Shah, S. Z. , Ali hindquarters S. and Hasan, A. ,2009. ? Corporate governance and earnings management an semiempirical evidence form Pakistani listed companies?. European Journal of Scientific Research, 26(4). 9Ashton, R. H. , Willingham, J. J. and Elliott, R. K. , 1987. ? An empirical analysis of audit delay?. Journal of Accounting Research, 25(2), 275-92. 10Atiase, R. K. , Bamber, L. S. nd Tse, S. , 1 988. ? Timeliness of financial reporting, the firm size effect, and stock price reactions to annual earning announcements?. modern Accounting Research, 5(2), 526-552. 11Bedard, J. , Chtourou, S. M. and Courteau, L. 2004. ? The effect of audit committee expertise, independence, and activity on aggressive earnings management?. Auditing, 23 (2), 23-36. 12Bursa Malysia website, Retrieved 12 July 2010 at http//www. bursamalysia. com. 13Carcello, J. V. and Neal, T. L. 2000. ? Audit Committee Composition and Auditor Reporting?. The Accounting Review. 75 (4), 453-467. 59 Pg11Pg11 14Carslaw, C. A. nd Kaplan, S. E. , 1991. ? An examination of audit delay further evidence from New Zealand?. Accounting & Business Research, 22(85), 21-32. 15 Chambers, A. E. , and Penman, S. H. , 1984. ? Timeliness of reporting and the stock price reactions to earnings announcements?. Journal of Accounting Research, Spring, 21-47. 16 Che-Ahmad, A. and Abidin, S. , 2008. ? Audit delay of listed companies A case o f Malaysia?. International Business Research, 1(4, 32-39. 17 Davies, B. and Whittred, G. P. , 1980. ? The association between selected corporate attributes and timeliness in corporate reporting further analysis?.Abacus, June, pp. 48- 60. 18 Dechow, P. M. , R. G. Sloan and A. P. Sweeney. , 1996. ? Causes and consequences of earnings manipulation an analysis of firms subject to enforcement actions by the SEC?. Contemporary Accounting Research, 13(1), 1-36. 19 DeZoort, F. T. ,1998. ? An analysis of experience effects on audit committee members? oversight judgments?. Accounting, Organizations and Society. 23(1), 1- 21. 20 DeZoort, F. T. , Hermanson, D. R. and Houston, R. W. , 2003. ? Audit committee support for auditors the effect of materiality confession and accounting precision?.Journal of Accounting and Public Policy. 22, 175-199. 21Farber, D. B. 2005. Restoring trust after humbug ? Does corporate governance matter? ? The Accounting Review, 80(2, 539-561. 22FASB, 1979. Proposed st atement of financial accounting concepts, qualitative characteristics criteria for selecting and evaluating financial accounting and reporting policies, Stamford, CT. 23Fraser, D. R. , Zhang, H. , and Derashid, C. , 2005. ? Capital structure and political patronage The case of Malaysia?. Journal of Banking & Finance. 24Gujarati, D. N. , 2003. ? Basic Econometrics, (4th Ed. ). New York McGraw-Hill. 25He, L. , Labelle, R. , Piot, C. and Thornton, D. B. , 2009. ? Board monitoring, audit committee effectiveness, and financial reporting quality Review and synthesis of empirical evidence?. Journal of Forensic & Investigative Accounting, 1(2). 26Hsiao,C. 2003. ? Analysis of panel data (2nd Ed. )?. United Kingdom Cambridge University Press. 27 Hsu H-H. , and Wu, Y-H. , 2010. ? Board composition, ? grey directors? and the incidences of corporate failure in the UK?. Retrieved 16th June 2010 from www. ssrn. com 28 Ismail, H. , Mohd. Iskandar, T. , and Mohid Rahmat, M. 2008. ? Corporate reporti ng quality, audit committee and quality of audit?. Malaysian Accounting Review, 7,(1), 21-42. 29 Jaggi, B. and Tsui, J. , 1999. ? Determinants of audit report lag further evidence from Hong Kong?. Accounting and Business Research, 30(1), 17-28. 30Jensen, M. C. and W. H. Meckling. , 1976. ? Theory of the Firm Managerial Behavior, Agency be and Ownership Structure?. Journal of Financial Economics, 3(4), 305-360. 31Klein, A. 2002. ? Economic determinants of audit committee independence?. Accounting Review, 77(2), 435-52. 32Leventis, S. , and Caramanis, C. 2005. ? Determinants of audit time as a procurator of audit quality?. Managerial Auditing Journal, 20, 460-478. 33Listing Requirements Bursa Malaysia2009. Retrieved16th April2010 from http//www. bursamalaysia. com. my 34Malaysian Code on Corporate Governance, revise 2007. Retrieved 16th April 2010 from www. sc. com. my 35 McGee, R. W. , 2007. ? Corporate governance and timeliness of financial reporting a case study of Russian energy sector?. Working paper, Barry University, Miami Shores, USA. 36 Menon, K. , and Williams, J. D. , 1994. ? The use of audit committees for monitoring?.Journal of Accounting and Public Policy, 13, 121-139. 60 Pg12Pg12 37 Mohd Ghazali, N. A. ,2010. ? Ownership structure, corporate governance and corporate performance in Malaysia?. International Journal of work and Management, 20, (2), 109- 119. 38 Ng, P. H. and Tai, Y. K. , 1994. ? An empirical examination of the determinants of audit delay in Hong Kong?. British Accounting Review, 26, 43-59. 39 Owusu-Ansah, S. and Leventis, S. , 2006. ? Timeliness of corporate annual financial reporting in Greece? , European Accounting Review, 15, 273-287. 40 Razman, S.R. , and Iskandar M. T. , 2004. ? The Effectiveness of Audit Committee in Monitoring the flavour of Corporate Reporting? , A Chapter in Corporate Governance An International Perspective. MICG Publication 154-175. 41 Tauringana, V. , Kyeyune, M. F and Opio P. J. , 2008. ? Corporate go vernance, dual language reporting and the timeliness of annual reports on the Nairobi Stock Exchange?. Research in Accounting in Emerging Economies, 8, 13-37. 42 Uzun, H. , S. H. Szewczyk and R. Varma. , 2004. ? Board composition and corporate fraud?. Financial Analysts Journal, May/June, 33-43. 61