Audit and Compilation Report Timeliness in Local Governments: an Empirical Investigation of Mississippi Governmental Entities That Exceed State Reporting Deadlines
For governmental audit and compilation reports to be relevant, they must be prepared and made available to the public in a timely manner. The purpose of this study is to identify variables that have an influence on audit and compilation report delay in governments. This research utilizes ordinary-least-squares regression to estimate the effects of several variables of interest on the time it takes to file the audit or compilation report with the Office of the State Auditor. The research also utilizes logistic regression to estimate the effects of several variables of interest on the incidence of filing the audit or compilation report after the state-mandated filing deadline versus filing on time. Data were gathered from audit and compilation reports of Mississippi counties and municipalities for fiscal-year 2007. The research questions addressed in this study were chosen based on the anticipated impact on audit timeliness of (1) report message content and managerial competency, (2) accountability, and (3) the audit environment. The results of the study indicate that the areas of report message content and managerial competency as well as the audit environment both play an important role in audit report and compilation report timeliness. The government's level of accountability was found to be less associated with report timeliness. A higher number of audit findings was found to be associated with longer audit report delay and longer compilation report delay as well as with late audits and late compilations. Entities receiving an adverse or qualified opinion were significantly associated with longer audit report delay as well as with late audits. The travel distance between the auditor's office and the audit client's office was also found to play a role in audit and compilation report timeliness. For full-scope audit engagements, a greater travel distance was associated with late audit filings, particularly when entities that represented their audit firm's only governmental attestation client were removed from the sample. Travel distance played a more important role with compilation engagements, as it was significantly associated with compilation report delay and was associated, to a lesser degree, with late compilation reports. A greater amount of long-term debt carried by the governmental entity was not found to be associated with shorter audit delays but was found to be somewhat associated with audits filed within the state-mandated one-year window. Overall, these results provide useful information for both small and large governmental entities that wish to improve the timeliness of their financial reporting.
Audit Findings, Audit Quality, Audit Timeliness, Municipal Audits, Accounting
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