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How does human resource investment in internal control affect audit reporting lag?

Author

Listed:
  • Il-Hang Shin
  • Ho-Young Lee
  • Hyun-Ah Lee
  • Myungsoo Son

Abstract

The Korean government requires listed firms to disclose the total number of employees engaged in the implementation of internal controls (hereafter, IC personnel) and the number of IC personnel in accounting, finance, information technology and systems departments, and other related functional areas. Using data unique to Korea, this study examines the effect of human resource investment in internal control on audit reporting lag (ARL). We employ quantitative and qualitative measures for the IC personnel, and the ARL is measured by the time between the fiscal year-end and the audit report date. We find an insignificant association between the quantitative measure (the number of IC personnel) and ARL. On the other hand, we find that the qualitative measure (the average experience of the IC personnel) reduces the audit time, thereby decreasing the ARL. This result highlights the importance of qualitative aspect in investments in IC personnel, which could be useful for firms that desire to reap the best result from the investment. Further analysis shows that investments in IC personnel at other departments as well as accounting and finance department increase audit efficiency. We confirm the robustness of our results through a series of additional analyses.

Suggested Citation

  • Il-Hang Shin & Ho-Young Lee & Hyun-Ah Lee & Myungsoo Son, 2017. "How does human resource investment in internal control affect audit reporting lag?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(1-2), pages 195-215, April.
    • Handle: RePEc:taf:raaexx:v:24:y:2017:i:1-2:p:195-215
    DOI: 10.1080/16081625.2015.1135751
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    Citations

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    Cited by:

    1. Suyon Kim, 2023. "Internal Control Managers’ Accounting Experiences on Audit Quality—Focus on ESG," IJFS, MDPI, vol. 11(2), pages 1-14, April.
    2. Susana Escaloni & Mercedes Mareque, 2021. "Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs," Sustainability, MDPI, vol. 13(22), pages 1-21, November.
    3. Eghosa Inneh & Isaiah Omotayo FAKUNLE & Romoke Rafiat BUSARI & Ibrahim Gbenga OLATUNJI, 2022. "Audit Characteristics and Financial Reporting Timeliness of Nigerian Listed Non-Financial Institution," Journal of Economics and Behavioral Studies, AMH International, vol. 14(2), pages 13-25.
    4. Ayad Ahmed Mohammed Al-Qublani & Hasnah Kamardin & Rohami Shafie, 2020. "Audit Committee Chair Attributes and Audit Report Lag in an Emerging Market," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 475-492, July.
    5. Choi, Dongjoon & Lee, Hansol & Lee, Ho-Young & Park, Hyun-Young, 2021. "The association between human resource investment in IT controls over financial reporting and investment efficiency," International Journal of Accounting Information Systems, Elsevier, vol. 43(C).
    6. Jaehong Lee & Suyon Kim, 2020. "Does Human Resource Investment for Internal Control System Enhance Future Cash Flow Predictability?," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    7. Awatif Hodaed Alsheikh & Warda Hodaed Alsheikh, 2023. "Does Audit Committee Busyness Impact Audit Report Lag?," IJFS, MDPI, vol. 11(1), pages 1-16, March.
    8. Jaehong Lee & Suyon Kim & Eunsoo Kim, 2021. "Voluntary Disclosure of Carbon Emissions and Sustainable Existence of Firms: With a Focus on Human Resources of Internal Control System," Sustainability, MDPI, vol. 13(17), pages 1-18, September.

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