Audit Report Lag and Its Determinants: Empirical Evidence from ROA, Financial Distress, and Audit Firm Size in Indonesia

Abstract

This study aims to examine the effect of Return on Assets (ROA), financial distress, and audit firm size on Audit Report Lag (ARL) in companies listed on the Indonesia Stock Exchange during the 2020–2023 period. The study employed a quantitative approach using a causal research design. The data used were secondary data obtained from companies’ annual reports and financial statements. Using purposive sampling, 212 firm-year observations were selected as the research sample. Data analysis was conducted using panel data regression with the assistance of Python statistical software after undergoing data cleaning, winsorization, variable transformation, and classical assumption testing to ensure that the model satisfied the BLUE criteria. The results indicate that financial distress has a significant effect on Audit Report Lag, suggesting that companies experiencing higher levels of financial difficulty tend to require longer audit completion times. This condition is associated with increased audit risk and greater audit effort. Meanwhile, ROA and audit firm size do not significantly affect ARL, indicating that profitability and auditor characteristics are not the primary determinants of audit reporting delays within the research model. These findings confirm that ARL is more strongly influenced by a company’s financial risk condition than by performance factors or auditor attributes. The study implies the importance of strengthening corporate governance and internal control systems to reduce audit delays and improve the timeliness of financial reporting.