FACTORS THAT DETERMINES AUDIT DELAY IN NIGERIA
ABSTRACT
This project examines the determinants of audit delay report in the 40 Nigeria listed companies and to find out the impact of selected corporate attributes, on audit delay in Nigeria. Timeliness of financial report is one of the attributes of good corporate governance identified by the organization for Economic Cooperation and Development (OECD) and World Bank. Shareholders and other stakeholders need information while it is still fresh and the more that passes between year-end and disclosure the more stale the information becomes and the less value it has. Nigeria listed companies take approximately four months on the average beyond their balance sheet date before they are finally ready for the presentation of the audited accounts to the shareholders at the annual general meeting. The results of the 40 listed Nigerian companies showed that most of the explanatory variables namely, profitability, total assets, total debt, total equity, audit fees and industry type have no significant impact on audit delay. While only international linkage showed significant impact on audit delay.    
  TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1        Background of the Study                                     
1.2        Research Problem                                                      
1.3        Research Questions                                    
1.4        Objectives of Study                                            
1.5        Scope of the Study                                     
1.6        Relevance of the Study                                       
1.7        Limitation of Study                                     
1.8        Hypotheses                                               
CHAPTER TWO: LITERATURE REVIEW
2.0    Introduction                                                               
2.1    Corporate Attributes and Audit Delay Relationship            
1.           Size of the Company                                           
2.           Debt-equity Ratio                                                       
3.           Profitability                                                
4.           Subsidiaries of Multinational Companies                  
5.           Audit Firm Size                                           
6.           Audit Fees                                                 
7.           Industry Type                                                            
CHAPTER THREE: RESEARCH METHODOLOGY
3.1        Introduction                                                       
3.2        Research Design                                                 
3.3        Type and Sources of Data                            
3.4        Research Instrument                                   
3.5        Method of Estimation                                  
3.6        Model Evaluation                                                
3.7        Test of Significance of Parameter Estimate           
(T-Statistic)                                                       
3.8        Goodness of Fit Test  - (R2)                          
3.9        Adequacy of Regression Equations (F-Test)             
CHAPTER FOUR:         DATA PRESENTATION AND ANALYSIS
4.1        Introduction                                                       
4.2        Data Presentation                                               
4.3        Data Analysis                                             
4.4        Descriptive Statistics                                   
4.5        Results of Correlation Analysis                              
4.6        Results Regression Analysis                          
4.7        Hypotheses Testing                                             
CHAPTER FIVE: SUMMARY, DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1        Summary                                                          
5.2        Discussion of Findings                                          
5.3        Conclusion                                                         
5.4        Recommendations                                              
Bibliography                                                                
CHAPTER ONE
INTRODUCTION
1.1       BACKGROUND OF THE STUDY
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.
1.2       RESEARCH PROBLEM
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?
1.3       RESEARCH QUESTIONS
This study addresses two main research questions:
1.    What are the factors responsible for audit delay?
 2.    What are the consequences of audit delay?
1.4    OBJECTIVES OF STUDY
The objectives of this study are:
1.     To find out the factors responsible for audit delay.
2.     To find out the consequences of audit delays.
Investors in today’s market are looking to accountant to provide reliable information on a more timely basis. At the same time, information technology is dramatically reducing the time it takes to close a company’s books and prepare financial statements.
According to Givoly and Palmon (1982) the length of the audit is the “single most important determinant of the timelines of the earning announcement”. As a result of these trends auditors are under increasing pressure to reduce the time it takes to complete the year-end audit. researchers have suggested that the length of time between the end of the fiscal year and end of audit report (called the audit report lag) is reflective of the efficiency of an engagement after considering other factor such as the amount of interim audit work performed, the number of audit personnel assigned to the engagement, number of overtime hours work, qualified opinion and existence of non financial information (Payne, 2001).
In addition, the results indicate that the timing of annual report releases is significantly affected by companies characteristic, company size, operational complexity, profitability, industry type and audit fees. Also, the consequences of audit delay as can be deduce from the study can lead to lack of confidence in the directors, continuous losses, fall in corporate image and liquidation in the long run.
1.5    SCOPE OF THE STUDY
This study is restricted to a cross sectional study of  40 companies listed  on the Nigerian Stock Exchange (NSE). The choice of companies from different sectors of the economy is to allow for a vast and robust study, as well as the decision relevance of the subject matter. The total annual reports of the selected companies will be used to facilitate the robustness and the informativeness of the study.
The study will cover a one year period (2008) during which these companies have witnessed some delays in audit.
The time audit delay data on each of the companies will be taken from their annual reports.
1.6    RELEVANCE OF THE STUDY
To be useful in business decision making, accounting information must be reliable, relevant and timely. There is no doubt that this study will push back the frontier of ignorance as well as making laudable contributions to knowledge. Information users consider that timing of financial reporting is an important complementary factor of accounting information. Stock values of publicly companies are assumed to be formed in the market by primarily being based on such disclosed information.
Timing of disclosing financial statement is also important for preventing trading activities of insiders, unofficial disclosure of news and market rumors (Ansah, 2000).    
1.7       HYPOTHESES
The following hypotheses are tested in the study.
1             Firms with greater assets are likely to complete audit of their accounts sooner than those firms with fewer total assets.
2             Firms with higher debt are likely to complete audit of their accounts sooner than firms with lower debt.
3             Firms with higher profit are likely to complete audit of their account sooner than firms with less profit.
4             Firms that engage audit firms with international linkage are likely to complete audit of their account sooner than those firm that engage firms without international linkage.
5             Firms with lower audit fees are likely to have the audit of their accounts completed sooner than those with higher audit fees.
6             Firms with less complex operations are likely to express completion of the audits of their accounts sooner than companies having complex manufacturing process.
7.     Firms with higher equity are likely to complete audit of their accounts sooner than firms with lower equity.
                Review, Vol. 55 (July), pp. 287-295.