It’s not Done until It’s Done: Late Audit Filings during COVID-19
35 Pages Posted: 2 Feb 2022
Date Written: February 1, 2022
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: Suggested Citation