The influence of shariah committee mechanisms on audit report delay: Before and during the COVID-19 crisis

Suzilawati Uyob (), Ana Salwa Md Zin (), Junaira Ramli (), Nur Amalina Abdul Ghani (), Jaizah Othman (), Kalsom Salleh () and Aza Azlina Md Kassim ()

International Journal of Applied Economics, Finance and Accounting, 2023, vol. 17, issue 2, 376-388

Abstract: This paper examines the relationship between Shariah committee mechanisms and audit report lag. Specifically, this study examines the relationship between the Shariah committee size, independence, frequency of meetings, and expertise. Furthermore, this study investigates the severe impacts of the COVID-19 crisis on the audit report lag. The panel data analysis analyses the relationship between Shariah committee mechanisms and the audit report lag of Malaysian Islamic banks from 2011 to 2021. The present study discovered that a majority of Islamic banks in Malaysia require a duration of 74 days to complete the issuance of independent auditor reports. The findings of the analysis suggest that there exists a negative correlation between the size of the Shariah committee, the frequency of meetings, and the level of knowledge, and the audit report lag. Furthermore, the investigation has also determined that the COVID-19 situation has had a significant impact on the postponement of audit reports. This study helps guide the policymakers in overseeing violation of the submission guidelines. It also presents the literature on audit report delay and Shariah mechanisms. The efficiency of the Shariah committee mechanisms is examined in this research as an extension of the use of agency theory. It helps to comprehend concerns with the Shariah committee mechanism in Malaysian Islamic banks. Then, this study provides evidence during the COVID-19 crisis and how to deal with a similar situation in the future. Additionally, it helps auditors and top management to better understand the good Shariah committee mechanism and audit report lag in planning audit engagements.

Keywords: Audit report lag; COVID-19; Islamic banks; Shariah committee mechanism. (search for similar items in EconPapers)
Date: 2023
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