Relationship between Audit Firm Specialization and Audit Delay

Abstract

The delay of disclosure of the independent auditors’ report is the time between the closing date of the company's fiscal year and the date of the independent auditors' report, which may be timelier or more delayed. Evidences indicate that, if the audit firm responsible for the report is specialized in the client industry, the release of the report can be made timelier. Thus, the present study aims to analyze the relationship between the audit firm's specialization and the audit delay. The research population comprises the companies listed on the BM&FBovespa and the sample corresponds to the 426 companies with data available, from 2010 to 2015. Descriptive statistics, the company's specialization calculation, the t-test for comparison of averages, Pearson's correlation and Linear Regression were used. The results indicate a negative and significant relationship between the firm's specialization and the audit delay, indicating that when the audit firm is an expert in the industry the audit lag is shorter. It is also worthy to note that the specialist companies are BIG4, that the ‘Financial and others’ and 'Technology and Telecommunication' sectors were the ones with the shortest times of audit delay and the sectors with the highest values for the same variable were 'Cyclic Consumption’, ‘Oil, gas and biodiesel’ and ‘Health’, The study contributes to the literature by analyzing two nationally understudied issues, besides highlighting the relationship between the audit firm's specialization and the audit delay.