Audit Failure: Audit Report Lag and Moderating Role of Family Ownership

Document Type : Research Paper


1 Assistant Prof. of Accounting, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran

2 MSc. Student of Accounting, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran


Restatements’ of financial statements and consequently audit failures are surprisingly high in Iran and audit report lag (ARL) is also falling sharply. Although there are studies about determinations of audit failure, the role of ARL in audit failure by taking into account the possible moderating role of family ownership has not been investigated.One of the factors that affects auditors’ ability in detecting breaches in clients’ financial statements is audit effort. Hence, it can be predicted that ARL, as a surrogate of audit effort, has a negative relation with audit failure. The results of multivariate analysis reveal that ARL has a negative and significant relation with Type II audit failure, but there is no significant association between ARL and Type I audit failure. Moreover, family ownership is positively associated with Type I audit failure and it has an insignificant relation with Type II audit failure. Finally our findings show that family ownership does not moderate the relation between ARL and Type II audit failure.


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