Board Independence, Audit Committee Characteristics, and Sharia Supervisory Board on Audit Report Lag

Abstract

This study empirically examines the influence of board independence, audit
committee size, audit committee expertise, audit committee meeting frequency, and
the presence of Sharia Supervisory Boards (SSBs) on audit report lag. The research
focuses on Islamic banking entities, specifically Islamic Commercial Banks (BUS)
and Sharia Business Units (UUS) listed with the Financial Services Authority (OJK)
in Indonesia during the 2019–2023 period. The sample was determined using a
purposive sampling technique, resulting in 130 observations that met the specified
research criteria. Data analysis was conducted using logistic regression to assess the
relationship between the governance variables and audit report lag. The findings
indicate that board independence, the frequency of audit committee meetings, and
the presence of an SSB have a significant negative effect on audit report lag,
suggesting these factors contribute to faster audit completion. In contrast, audit
committee size and audit committee expertise do not exhibit a statistically
significant effect. This study introduces a novel perspective by incorporating SSB
variables and adapting the measurement approach to reflect the Indonesia Stock
Exchange (IDX) policy, which extends the deadline for financial report submissions.
The results provide valuable insights into the governance mechanisms that can
potentially enhance audit efficiency and reduce audit report lag within the context
of Islamic banking.