Establish an effective audit committee

Oct 13, 2025 by wbrum.org 70 views

The Effect of Operational Complexity, KAP Size, Independent Commissioner, Leverage, and Audit Committee on Audit Delay in Consumer Goods Industry Sector Companies Listed on the IDX (2016-2018)

Introduction

The audit process is a crucial aspect of a company's financial management, as it provides stakeholders with a clear understanding of the company's financial performance and position. However, audit delays can have significant consequences, including decreased investor confidence, reduced market value, and increased regulatory scrutiny. In this study, we aim to investigate the effect of several factors, including operational complexity, KAP size, independent commissioner, leverage, and audit committee, on audit delay in consumer goods industry sector companies listed on the Indonesia Stock Exchange (IDX) during the 2016 to 2018 period.

Background

The consumer goods industry is a significant sector in the Indonesian economy, with many companies listed on the IDX. However, the industry is also characterized by high levels of competition, rapid changes in consumer preferences, and increasing regulatory requirements. These factors can contribute to operational complexity, which can, in turn, lead to audit delays. The role of the audit committee, KAP size, independent commissioner, and leverage are also critical factors that can impact audit delay.

Research Methodology

This study employed a quantitative approach, using a purposive sampling method to select 37 companies from the consumer goods industry sector listed on the IDX. The data analyzed came from financial statements and company annual reports accessed through the official website of the Indonesia Stock Exchange (www.idx.co.id). Multiple linear regression analysis was used as the main data analysis technique to measure the effect of independent variables on the dependent variable.

Research and Analysis Results

The results of this study showed a significant relationship between operational complexity and audit delay. The more complex the operation of a company, the more likely the delay in the audit process. This may be caused by the number of transactions that must be checked, variations in the type of product, as well as the complexity of the system that must be assessed, all of which can extend the time needed to complete the audit.

On the other hand, the size of the KAP, the role of the independent commissioner, and leverage showed no significant impact on audit delay. Although the size of the KAP should have an effect because of their reputation and ability to handle more complex audits, there may be other factors that are more dominant in this context. For example, these companies may use KAP with a large reputation, but do not optimize their audit process.

This incident reflects that the existence of an independent commissioner as a supervisor does not always mean that the audit will be more quickly resolved. There may be challenges in communication or decision making that actually hamper the audit process. On the other hand, leverage, which is often associated with financial risk, also does not have a significant impact, shows that companies with high levels of debt do not always appear slow in the audit process.

The Importance of Audit Committee

The existence of an audit committee is critical in ensuring the efficiency of the audit process. The audit committee plays a crucial role in overseeing the audit process, ensuring that it is conducted in a timely and effective manner. The results of this study showed that the existence of an audit committee has a significant impact on audit delay. This is because the audit committee can provide guidance and oversight to the audit process, ensuring that it is conducted in a manner that is consistent with the company's policies and procedures.

The Impact of Operational Complexity

Operational complexity is a critical factor that can impact audit delay. The more complex the operation of a company, the more likely the delay in the audit process. This may be caused by the number of transactions that must be checked, variations in the type of product, as well as the complexity of the system that must be assessed, all of which can extend the time needed to complete the audit.

Conclusion

Overall, this research confirms the importance of attention to the complexity of operations and the existence of an audit committee in auditing time management in the consumer goods industry sector company. This knowledge can be utilized by managers and stakeholders to improve the efficiency of the audit process in the future, as well as increasing responses and transparency in the financial statements produced. Thus, the company is expected to be able to establish a better strategy in audit management to minimize delays in reporting, which will ultimately increase the reputation and trust of stakeholders.

Recommendations

Based on the findings of this study, the following recommendations are made:

Establish an effective audit committee: The existence of an audit committee is critical in ensuring the efficiency of the audit process. The audit committee should be composed of independent and experienced members who can provide guidance and oversight to the audit process.
Optimize the audit process: Companies should optimize their audit process to minimize delays in reporting. This can be achieved by streamlining the audit process, reducing the number of transactions that must be checked, and improving communication between the audit team and the company's management.
Reduce operational complexity: Companies should reduce operational complexity by simplifying their operations, reducing the number of products they offer, and improving their supply chain management.
Improve communication: Companies should improve communication between the audit team and the company's management to ensure that the audit process is conducted in a timely and effective manner.

Limitations of the Study

This study has several limitations that should be noted. Firstly, the study only focused on consumer goods industry sector companies listed on the IDX, which may not be representative of all companies in the industry. Secondly, the study only analyzed data from the 2016 to 2018 period, which may not be representative of the current market conditions. Finally, the study only used multiple linear regression analysis as the main data analysis technique, which may not be the most effective method for analyzing the data.

Future Research Directions

This study provides several directions for future research. Firstly, future studies should investigate the impact of other factors, such as company size, industry type, and market conditions, on audit delay. Secondly, future studies should analyze data from other countries or regions to determine whether the findings of this study are generalizable. Finally, future studies should use more advanced data analysis techniques, such as machine learning or artificial intelligence, to analyze the data and identify patterns and relationships that may not be apparent using traditional statistical methods.
Q&A: The Effect of Operational Complexity, KAP Size, Independent Commissioner, Leverage, and Audit Committee on Audit Delay in Consumer Goods Industry Sector Companies Listed on the IDX (2016-2018)

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of several factors, including operational complexity, KAP size, independent commissioner, leverage, and audit committee, on audit delay in consumer goods industry sector companies listed on the Indonesia Stock Exchange (IDX) during the 2016 to 2018 period.

Q: What is operational complexity, and how does it impact audit delay?

A: Operational complexity refers to the complexity of a company's operations, including the number of transactions, variations in product types, and complexity of the system that must be assessed. The results of this study showed that the more complex the operation of a company, the more likely the delay in the audit process.

Q: What is the role of the audit committee in ensuring the efficiency of the audit process?

A: The audit committee plays a crucial role in overseeing the audit process, ensuring that it is conducted in a timely and effective manner. The results of this study showed that the existence of an audit committee has a significant impact on audit delay.

Q: What is the impact of KAP size on audit delay?

A: The results of this study showed that KAP size has no significant impact on audit delay. Although the size of the KAP should have an effect because of their reputation and ability to handle more complex audits, there may be other factors that are more dominant in this context.

Q: What is the impact of independent commissioner on audit delay?

A: The results of this study showed that the existence of an independent commissioner as a supervisor does not always mean that the audit will be more quickly resolved. There may be challenges in communication or decision making that actually hamper the audit process.

Q: What is the impact of leverage on audit delay?

A: The results of this study showed that leverage, which is often associated with financial risk, also does not have a significant impact on audit delay. This suggests that companies with high levels of debt do not always appear slow in the audit process.

Q: What are the implications of this study for companies in the consumer goods industry sector?

A: The findings of this study have several implications for companies in the consumer goods industry sector. Firstly, companies should optimize their audit process to minimize delays in reporting. Secondly, companies should reduce operational complexity by simplifying their operations, reducing the number of products they offer, and improving their supply chain management. Finally, companies should establish an effective audit committee to oversee the audit process and ensure that it is conducted in a timely and effective manner.

Q: What are the limitations of this study?

A: This study has several limitations that should be noted. Firstly, the study only focused on consumer goods industry sector companies listed on the IDX, which may not be representative of all companies in the industry. Secondly, the study only analyzed data from the 2016 to 2018 period, which may not be representative of the current market conditions. Finally, the study only used multiple linear regression analysis as the main data analysis technique, which may not be the most effective method for analyzing the data.

Q: What are the future research directions for this study?

A: This study provides several directions for future research. Firstly, future studies should investigate the impact of other factors, such as company size, industry type, and market conditions, on audit delay. Secondly, future studies should analyze data from other countries or regions to determine whether the findings of this study are generalizable. Finally, future studies should use more advanced data analysis techniques, such as machine learning or artificial intelligence, to analyze the data and identify patterns and relationships that may not be apparent using traditional statistical methods.

Q: What are the practical implications of this study for auditors and regulators?

A: The findings of this study have several practical implications for auditors and regulators. Firstly, auditors should be aware of the potential impact of operational complexity on audit delay and take steps to mitigate this risk. Secondly, regulators should consider the impact of audit delay on the financial reporting process and take steps to ensure that companies are able to report their financial results in a timely and accurate manner. Finally, regulators should consider the role of the audit committee in ensuring the efficiency of the audit process and take steps to ensure that companies have effective audit committees in place.