Fraud risk prediction as a moderator of the relationship between operational complexity and audit report lag
Keywords:
Audit Completion Time, Audit Report Lag, Operational Complexity, Fraud Risk Prediction, Beneish M-Score, Agency TheoryAbstract
This study examines the effect of operational complexity on the likelihood of increased audit completion time and investigates the moderating role of fraud risk prediction. Increased audit completion time may reduce the timeliness and relevance of financial information. Operational complexity expands the scope and difficulty of audit procedures, while potential fraud risk increases audit uncertainty and requires more extensive audit examination. This study employs a quantitative approach using companies listed on the Indonesia Stock Exchange (IDX) as the research population. The sample was selected using a census sampling method based on the availability of complete annual reports and audited financial statements during the 2020–2024 period, resulting in 639 companies with 3,195 firm-year observations. Data were analyzed using logistic regression with Moderated Regression Analysis (MRA) through STATA 17. The increase in audit completion time was measured using a dummy variable, with a value of 1 when the current year’s audit completion period was longer than the previous year and 0 otherwise. Operational complexity was used as the independent variable, fraud risk prediction proxied by the Beneish M-Score as the moderating variable, and auditor reputation, firm size, and industry type as control variables.
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