It’s not Done until It’s Done: Late Audit Filings during COVID-19

35 Pages Posted: 2 Feb 2022

See all articles by Landi Morris

Landi Morris

Bentley University

Rani Hoitash

Bentley University - Department of Accountancy

Udi Hoitash

Northeastern University - Accounting Group

Date Written: February 1, 2022

Abstract

The COVID-19 pandemic introduced unprecedented challenges to the audits of public companies. In response, the SEC made available a unique one-time 45-day extension to file the audited annual report. This study examines the likelihood and consequences of late filings during COVID-19. We leverage the first year of the pandemic, in which audits completed prior to the national emergency serve as a control group, to execute a difference-in-differences design. We observe a significant increase in the likelihood of a late filing during the pandemic. We further manually identify late filings that are attributable to the auditor. Utilizing this data, we observe a decline in audit quality only when the delay is not attributed to the auditor, indicating that auditor-provoked delays are effective in maintaining quality. Additionally, while we observe an increase in the number of new modified going concern opinions, we also observe a decline in the number of Type I going concern errors made by auditors during the pandemic. Our study informs regulators about the impact of the unprecedented SEC filing extensions.

Keywords: COVID-19, Coronavirus, late filings, discretionary accruals, going concern, audit quality, remote work, pandemic

JEL Classification: M4, M41, M42

Suggested Citation

Morris, Landi and Hoitash, Rani and Hoitash, Udi, It’s not Done until It’s Done: Late Audit Filings during COVID-19 (February 1, 2022). Available at SSRN: https://ssrn.com/abstract=4023505 or http://dx.doi.org/10.2139/ssrn.4023505

Landi Morris (Contact Author)

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Rani Hoitash

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

HOME PAGE: http://www.xbrlresearch.com

Udi Hoitash

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States
671-373-5839 (Phone)

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