The average governmental audit now takes a month longer, based on a sample of large cities for fiscal year 1996. The purpose of this study is to reexamine the timely reporting determinants, review individual audit firm performance, and introduce a new technology construct on Internet reporting. The determinants of the timeliness of audit reporting are of interest for two reasons. First, users of financial information need timely results. Bond holders, city officials and citizens use this information to make decisions.
Delays can result in lost opportunities, increased risks, and asymmetry of information.
Second, a better understanding of timeliness may provide insights into audit efficiency. Efficiency means the use of fewer inputs to obtain a given output, and the time it takes to complete and communicate an audit is one proxy for audit inputs. The additional complexity of federal laws likely is a major factor increasing audit time. The paper analyzes the audit reporting timeliness of U.S. cities with populations over 100,000 since bond investor analysis and signaling incentives should be strong. In addition, data was obtained from U.S. Census publications and state surveys.