The on investor self-assurance. The regulatory bodies
The effective and efficient of financial markets depends on investor self-assurance. The regulatory bodies are always improve the regulattory frameworks to the businesses to attract domestic and foreign investors. Besides that, many accounting and auditing empirical studies have conducted corporate governance in recent years particularly audit committee for inspiring to investigate the role of audit committee characteristics in monitoring the quality of financial reporting and disclosure.
Audit committee is a crucial part of corporate governance structure and the most significant audit committee can conduct transparency, attention and self-reliance perception required to supervise the procedures of corporate reporting (MCCG, 2017).
According to the Security and Exchange Commission’s (SEC), (2002) primarily proposal more specific definition on audit committee financial expertise and it was required to each public company to disclose at least one audit committee member with accounting expert (e.g. public accounting, auditor, CFO, controller, or accounting officer) or if not, disclose reasons . This definition could inferred the Security and Exchange Commission’s was belief that financial expertise that lacks the accounting qualification in monitoring financial reporting is less effective than an accounting expert on audit committee (Bryan, Liu, & Tiras, 2013).
The final definition of “Audit Committee Financial Expert”, SEC’s (2003) frames that an audit committee member who has these characteristics (1) an understanding GAAP and financial statement (2) an able to evaluate accounting for estimates, accruals and reserves (3) experience preparing, auditing, analysing or evaluating financial statements (4) an understanding of internal control and procedures for financial reporting and (5) an understanding of audit committee functions.
According to the Malaysian corporate governance framework, the members of the audit committee must not be less than three persons and all members of the audit committee must be non-executive directors, with a majority of them being independent directors. Addition, at least one member of the audit committee must be an affiliate of the Malaysia Institute of Accountants (MIA). If the member of the audit committee is not a member of MIA, the member must have at least three years of working experience MCCG, (2012). Moreover, the chairman of the board must not hold the position of audit committee chairman and new code is also recommended the audit committee encompass independent directors only (MCCG, 2017).
According to the conceptual framework of MASB, (2011) timely information is having information to decision-makers with in time of taking their decisions before it misses the capacity to influence their decisions. Audit report timeliness is defined the day on which external auditor signed the report after financial year-end while, audit report lag can simply defined the days between an-audited financial statement and audited financial statement.
The aims of this study are to extend the extent literatures on audit committee financial expertise by examining the association between audit committee financial expertise and audit report timeliness and determine how audit committee with accounting expertise (i.e., academic accounting, public accounting and CFO experience) separately influences audit report timeliness an emerging country.
Audit committees play pivotal role in assisting to ensure market confidence in highly quality financial reporting through supervising overall procedure of financial information and the nomination of appropriately qualified members to the audit committee is important for a committee’s performance (PricewaterhouseCoopers, 2003). The chair position of audit committee has exceptional responsibilities like controlling agenda, meeting, discussions, building the proper relationship with auditors and management and enhancing the interaction amidst audit committee members (Bédard & Gendron, 2010).
Ika & Mohd Ghazali, (2012) documented that audit committee effectiveness is more useful factor that influencing timeliness of reporting and improving timeliness of financial reporting depends on how the companies further enhance audit committee effectiveness. It is crucial to know the determinants of audit delay Carslaw & Kaplan, (2012); may simplify the structure and function of the audit profession Ashton et. al., (1989); response “news-driven society” necessary reliable information as soon as possible (Sultana et. al., 2014).
In the context of Malaysia, one member of audit committee have to affiliate Malaysian Institute Accounting (MIA), if not, the member must have at least three years of working experience (MCCG, 2012). Further, Bursa Malaysia requires timely information according to the provision of Chapter 2 (2.03-2) and Chapter 9 (9.01-3) of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Malaysia). However, the issue of timely information in Malaysian public listed companies may still exist. Che-ahmad & Abidin, ( 2008) pointed out audit delay of Malaysian companies take long to produce audit report compare to the delay in Western countries. Further reason, MCCG (2012) underlines the essential of timely and high quality of disclosure as mention principle seven. Therefore, this study attempts to examine whether audit committee members with accounting expert influences on audit report timeliness an emerging countries (i.e. Malaysia).
Motivation of the study
The motivation behind this study is the Malaysian Code Corporate Governance (MCCG) 2012 highlights on the importance of timely and high quality of disclosure as stimulated in Principle 7 which is in line with Listing Requirements of Bursa Malaysia Securities Berhad: Chapter 9 on Continuing Disclosure, 9.23 issue of annual audited financial statement and annual report. From this study, it is a part of ongoing debate the effectiveness of audit committee influences on financial reporting quality, particularly timely information and it will hope to identify whether audit committee financial expertise influences on audit report timeliness.