https://dinastipub. org/DIJEFA Vol. No. 4, 2025 DOI: https://doi. org/10. 38035/dijefa. https://creativecommons. org/licenses/by/4. Analysis of the Impact of KAP Reputation. Profitability. Institutional Ownership, and Audit Committee on Audit Report LAG Heru Universitas Terbuka. Indonesia, 043795081@ecampus. Corresponding Author: 043795081@ecampus. Abstract: This study aims to investigate the impact of public accounting firm (KAP) reputation, profitability, institutional ownership, and the existence of audit committees on audit report lag in publicly listed businesses within the primary consumer goods sector on the Indonesia Stock Exchange. This study adopts a quantitative research methodology, utilizing multiple linear regression analysis and gathering data through documentary research. The study population comprises 131 enterprises, from which a purposive sampling technique was employed to choose 87 sample entities. The data processing and analysis included descriptive statistics, diagnostic evaluation of classical assumptions, multiple linear regression modeling, determination of the coefficient of determination, and hypothesis testing. The empirical findings indicate that the reputation of the KAP, profitability, institutional ownership, and the audit committee have a statistically significant negative impact on audit report latency. The modified R-squared value of 0. 252 signifies that around 25. 2% of the variance in audit report latency is explained by the independent variables, while the remaining 74. 8% is due to external factors not considered in this study. The author recommends that future research consider the addition of moderating or intervening variables, such as audit quality, company size, or operational complexity, to obtain more comprehensive results. Keywords: Auditor Reputation. Profitability. Institutional Ownership. Audit Committee. Audit Report Lag. INTRODUCTION Companies operating in the primary consumer sector often have a complex and extensive supply chain and distribution system that extends . overing a wide geographic area, including remote locations in Indonesi. and significant inventory variations. The audit process on these aspects can take longer. Businesses in the basic consumer goods sector typically involve a high volume of buying and selling transactions that require a more thorough examination by the The quality and efficiency of the company's internal control system significantly impact the audit duration. If internal control is weak, the auditor must conduct more in-depth and extensive testing, which will extend the audit time. The completeness, accuracy, and 2956 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 timeliness of the company's financial information presentation are crucial. Inadequate information systems or slow data collection processes can delay the completion of the audit. This sector faces unique accounting challenges related to revenue recognition . articularly about promotions and discount. , inventory valuation . ncluding perishable or expired good. , and marketing and distribution costs. The availability of qualified and independent auditors is also critical. If the public accounting firm (KAP) has a high burden or has difficulty maintaining independence, the audit process can be delayed. Changes in regulations or more complex reporting requirements can increase the workload for auditors and companies, potentially extending the period. Investors of the main consumer products sector are especially focused on the financial performance of companies, as this sector is often viewed as a reflection of economic stability. Delays in the delivery of financial reports can raise concerns. This sector generally faces very tight competition. Data and information on financials must be presented promptly, as investors must compare performance between companies and make informed investment decisions. Late financial information can prevent companies from responding to market dynamics or supply chain challenges in a timely manner. The end-of-period interval for the issuance of financial reports and audit reports by external auditors, more commonly referred to as the audit report lag, becomes an essential indicator of the timeliness of financial information disclosure. The longer the information lags, the longer the uncertainty will increase for stakeholders. Long lags hinder the provision of relevant and reliable information for investors, analysts, and creditors. This can impede the making of appropriate and efficient investment decisions. Delays in issuing audit reports can create information gaps between insiders . and outsiders . Managers obtain earlier information that they can use. Longer audit report lags can be associated with greater stock price fluctuations and even price declines after the release of financial statements. This indicates uncertainty and risk perceived by investors. Companies that consistently have audit reports with lags for long periods can be considered less compliant with capital market regulations and potentially damage the Company's reputation among investors and supervisors. For an efficient capital market, information must be available in a timely and relevant manner. Significant time lags in audit reports can hinder market efficiency in reflecting the actual value of assets. The reputation of a public accounting firm is the public's and stakeholders' perception of the quality, reliability, and integrity of the audit services provided by a PAF. A good reputation is built through consistency in delivering high-quality audits, adhering to professional and ethical standards, and independence in carrying out assignments. Larger KAPs, especially those incorporated in the Big Four, which is a group of four large audit firms such as Deloitte. Ernst & Young. KPMG, and PwC, are often considered to have a better reputation due to their experience, resources, and global network. KAPs that have established a good reputation are typically accompanied by audit teams that are more experienced, well-trained, and have a deep understanding of the primary consumer goods industry. The professionalism established by the Company, along with its existing image, already known to the public, especially among large companies, enables them to conduct audits more efficiently and accurately. By conducting an audit by a reputable KAP on a Company or organisation, the audited Company tends to be more cooperative and responsive to the auditor's information requests, as the auditor recognises the importance of a quality and timely audit. Profitability represents a company's capacity to produce profits through its resources, which encompass assets, capital, and sales. Profitability ratios assess a company's capacity to effectively generate profits from its sales, assets, or equity transactions. Companies that generate high profits do not typically face the issue of immediately releasing their financial Companies tend to focus more on operational aspects or other strategies and believe that delays in audits will not hurt investor perceptions. Highly profitable companies engage in 2957 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 complex financial transactions, so the audit process takes longer because auditors must conduct a more thorough investigation to ensure accuracy and completeness. On the other hand, companies with low profitability often attempt to delay the issuance of financial statements to improve the report's appearance or find ways to describe their performance better, which can result in delays or require a longer audit process. Companies with poor financial performance experience resource constraints, including a lack of skilled accounting staff, which can slow down the audit process of financial statements. Low profitability can be an indication of economic problems or even financial difficulties. This condition can increase the risk in the eyes of the auditor, so the auditor needs additional time to carry out more thorough and careful audit procedures. The number or proportion of shares in a company controlled by institutional investors shows institutional ownership rights. These institutional investors are large organisations that manage funds on behalf of other parties, such as pension funds, insurance companies, investment companies, foundations, endowments, banks, and other financial institutions. Active institutional investors can offer tighter oversight of company management, including in the preparation of financial statements. The incentive to present appropriate and accurate financial statements can increase, motivating managers and auditors to operate more Institutional investors typically require timely financial information to make investment Institutional investors can encourage companies and auditors to expedite the audit process, allowing data to be available more quickly. Strong institutional investors are often associated with stable corporate governance practices, which also results in better audit Better communication between managers and auditors, as well as smooth audit processes, are also indicators of a more effective audit committee. Experienced institutional investors have a deeper understanding of the audit process and can help companies prepare the necessary information. The audit committee is intended as a body whose formation is carried out by the board of commissioners to support the implementation of tasks and support the supervisory function of the board of commissioners, especially all matters that are related and connected to financial reports, risk management, internal and external audits, and compliance with applicable The audit committee carries out its duties independently. Accountability for their work directly to the board of commissioners. A lack of expertise and experience among audit committee members in accounting and auditing can hinder the evaluation of financial statements and interaction with auditors, thereby prolonging the audit report lag. The audit committee must be independent, meaning that it is not part of the company's management. otherwise, its ability to supervise and provide neutral advice may be compromised. This condition can affect the quality of the audit process and delay its completion. The frequency and quality of audit committee meetings also have a significant impact. Audit committees that are less active in discussing audit findings and correcting accounting problems cause delays in the audit process. Audit committees that are too small may lack the resources needed for effective oversight, while committees that are too large may create inefficiencies in decision-making. The degree of independent membership on an audit committee is often related to the audit report lag, which is shorter because independence is considered to support objectivity in supervision. Ineffective communication and coordination between the audit committee and external auditors will likely cause delays during the audit process, extending from the audit commencement to the issuance of the audit report. If the audit committee is ineffective in supervising the production of financial reports by management, errors or discrepancies that require more time to be addressed by the auditor will increase, which in turn prolongs the audit report lag. 2958 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 Theoretical Framework and Hypothesis Development Theoretical Framework Compliance Theory According to (Harris et al. , 2. , compliance theory explains that organizations tend to follow regulations because they recognize the legitimacy and authority inherent in those regulations in guiding their behaviour. In the realm of auditing, this means that auditors are expected to consistently comply with established audit standards as a form of professionalism and integrity in carrying out their duties. Non-compliance or delays in completing audit reports can raise doubts among users of financial statements regarding the quality and reliability of the information presented. Therefore, auditor compliance with audit standards not only reflects technical competence but also plays a vital role in maintaining the reputation and public trust in audit results. Compliance theory suggests that the level of professionalism auditors exhibit when carrying out audit procedures can influence audit reporting delays. By complying with applicable regulations and binding sanctions, auditors are expected to complete audits of financial statements efficiently, thereby minimising the lag in audit report issuance and achieving timeliness in issuing audit reports on financial statements. Theory Signalling Ghozali . explains that signalling theory focuses on the communication mechanisms carried out by companies or management to external parties, such as investors and other stakeholders. In this context, the signals sent can take various forms of information, some of which are easy to understand directly, while others require deeper analysis to capture their meaning properly. The essence of this theory is that these signals are designed to convey specific messages that are expected to influence the perception and assessment of external parties regarding the company's condition and prospects. The primary objective of signalling theory is to assert that individuals or groups within a company, particularly management, have access to more comprehensive and accurate information regarding the organization's financial condition, activities, and future outlook in relation to external stakeholders, including investors, creditors, regulators, and Thus, companies have a significant information advantage, which enables them to control and direct the information they convey to the public. This is important because the existence of information asymmetry between internal and external parties can influence investment decisions and risk assessments made by stakeholders. In practice, the signals selected and delivered by management must contain information that is both strong and credible enough to influence the expectations and decisions of external parties effectively. Therefore, choosing the proper signal is a crucial strategy for establishing the company's trust and reputation in the eyes of the market, ensuring that the information delivered reduces uncertainty and increases transparency. Audit Report Lag Adrea . defines audit report lag as the interval, measured in days, between the conclusion of the financial reporting period and the issuance date of the audit report. The timely delivery of economic reports is crucial because it significantly influences stakeholders' investment decisions. If financial reports are not delivered promptly, the information received by stakeholders may be less accurate and potentially risky. Hypothesis Development The Impact of Public Accounting Firm (KAP) Reputation on Audit Report Lag (Rahmadhanni et al. , 2. explained that the reputation or image of a Public Accounting Firm (KAP) is a picture of the perception formed among the public and stakeholders regarding the quality, reliability, and integrity of the audit services provided 2959 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 by the KAP. A positive perception of the KAP's reputation serves as a major driver in ensuring the audit process is conducted efficiently and punctually. Reputable KAPs typically expedite the submission of audit reports, hence hastening the company's financial reporting cycle. Within the framework of compliance theory. KAP, with an excellent reputation, is usually supported by adequate resources, including highly competent professionals and the use of advanced audit technology. These factors enable KAPs, especially those belonging to the Big Four group, to carry out the audit process with a higher level of efficiency and effectiveness compared to other KAPs. Consistent adherence to strict audit quality standards motivates Big Four KAP to complete audits quickly without sacrificing the quality of audit results. Furthermore, a strong reputation also reflects the KAP's commitment to maintaining high standards of professionalism and integrity, which in turn increases stakeholders' trust in the audited financial statements. Thus, the KAP's reputation serves not only as an indicator of the quality of audit services but also as a strategic factor that influences the speed and timeliness of audit completion, which is crucial in the context of transparency and accountability in financial reporting. Rahmadhanni et al. assert that The credibility of a Public Accounting Firm (KAP) signifies the collective perception held by the public and stakeholders concerning the quality, dependability, and ethical standards of the audit services provided. A favorable reputation functions as a critical factor in promoting the efficient and timely execution of the audit process. Public Accounting Firms with strong reputations are generally able to shorten the audit report submission period, thereby expediting the overall financial reporting timeline of the company. Within the framework of compliance theory. KAP, with an excellent reputation, is usually supported by adequate resources, including highly competent professionals and the use of advanced audit technology. These factors enable KAPs, especially those belonging to the Big Four group, to carry out the audit process with a higher level of efficiency and effectiveness compared to other KAPs. Consistent adherence to strict audit quality standards motivates KAP Big Four to complete audits efficiently without compromising the quality of audit results. Furthermore, a strong reputation also reflects the KAP's commitment to maintaining high standards of professionalism and integrity, which in turn increases stakeholders' trust in the audited financial statements. Thus, the KAP's reputation serves not only as an indicator of the quality of audit services but also as a strategic factor that influences the speed and timeliness of audit completion, which is crucial in the context of transparency and accountability in financial reporting. H1: The reputation of the Public Accounting Firm (KAP) has a negative influence on audit report lag. The Effect of Profitability on Audit Report Lag Senduk et al. assert that profitability reflects a firmAos capacity to generate earnings through the efficient utilization of its resources, including assets, capital, and sales. Profitability ratios function as indicators to evaluate a companyAos efficiency in generating returns relative to its sales, assets, or equity. Firms exhibiting a high Return on Assets (ROA) typically possess robust internal control systems and employ more accurate and reliable accounting procedures. Such conditions facilitate auditors in executing and finalizing the audit process with greater efficiency, thereby contributing to a reduction in audit report lag. H2: Profitability has a negative influence on audit report lag. 2960 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 The Effect of Institutional Ownership on Audit Report Lag According to (Krisnawati et al. , 2. , institutional ownership refers to the percentage of a company's shares owned by institutional investors, such as pension funds or investment companies, which usually have a significant influence on corporate decision-making. Institutional investors typically require companies to comply with applicable accounting regulations and standards. According to compliance theory, the pressure exerted by institutional investors motivates management to conduct the audit process efficiently and to timely issue audit reports, thereby mitigating the risk of sanctions and preserving the confidence of institutional shareholders. H3: Institutional ownership has a negative influence on audit report lag The Influence of the Audit Committee on Audit Report Lag According to Ermawati et al. , the audit committee is a body established by the board of commissioners with the principal aim of facilitating the companyAos supervisory This committeeAos core responsibilities encompass overseeing the preparation of financial statements, managing risk, coordinating internal and external audits, and ensuring adherence to relevant regulatory requirements. The presence of an effective audit committee plays a vital role in enhancing the quality of oversight throughout the financial reporting process. With stricter and more structured supervision, management is encouraged to be more disciplined in implementing appropriate accounting principles and complying with relevant regulations. This increase in compliance level ultimately reduces the potential for errors or inaccuracies in financial statements, thereby speeding up and facilitating the overall audit process. H4: The audit committee has a negative influence on audit report lag. Conceptual Framework Figure 1 depicts the conceptual framework developed to illustrate the hypothesized relationships among the study variables: Figure 1. Research Model Source: Literature Review, 2025 METHOD This study employs an associative research design aimed at rigorously examining the relationships among the selected variables. The population of this study comprises 131 companies operating within the primary consumer sector and listed on the Indonesia Stock Exchange. To enhance the relevance and accuracy of the sample selection, a purposive sampling method was employed, based on predetermined criteria aligned with the research objectives, whereby sample selection was guided by specific, predefined criteria that are closely aligned with the studyAos research objectives. This methodological approach facilitates 2961 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 the inclusion of only those entities that meet the essential characteristics required for a thorough and meaningful analysis, thereby enhancing the validity and reliability of the studyAos findings. From this process, a sample of 87 companies was obtained. The inclusion criteria used include companies that present complete financial reports and companies that have conducted an initial public offering before 2019. For data analysis, this study employs several methods, including descriptive statistics to describe data characteristics, classical assumption testing to ensure model validity, multiple linear regression analysis to examine the relationship between variables, and hypothesis testing to determine the significance of the independent variables' influence on the dependent variables. Independent Variables The independent variables included in this study are: KAP Reputation (Rahmawati & Widati, 2. stated that in this study, the reputation of the Public Accounting Firm (KAP) was operationalised using dummy variables. This variable differentiates companies based on the type of KAP they use in the audit process. Companies that use KAP services, which fall into the category of the Big Four, known for their high reputation and strict audit standards, are assigned a dummy value of 1. Conversely, the use of KAP services, which generally have a lower reputation among companies, is assigned a dummy value of 0. This approach enables researchers to quantify the influence of KAP reputation on the dependent variable in the analysis model used. Profitability According to (Soleha, 2. in this study profitability uses return on assets. As for the formula return on asset as follows: ycAyceyc ycEycycuyceycnyc yayceycyceyc ycNycaycu yayaycAyaycNya = ycNycuycycayco yaycycyceycyc Institutional Ownership According to (Sipahutar et al. , 2. the institutional ownership formula is as follows: ycAycycoycayceyc ycuyce yaycuycycycnycycycycnycuycuycayco ycIEaycaycyceyc yaycuycycycnycycycycnycuycuycayco ycCycycuyceycycEaycnycy = ycNycuycycayco ycIEaycaycyceyc ycCycycycycycaycuyccycnycuyci Audit Committee According to Rosalia, et al. , . 9: . the audit committee formula is as follows: Audit Committee = Number of Audit Committees Dependent Variable Menurut (Harris et al. , 2. hears formula report lag as follows: Audit Report Lag= Audit Date Ae Book Closing Date RESULTS AND DISCUSSION Descriptive Statistics Descriptive statistics is a data analysis technique used to present a brief overview of the characteristics of data that has been collected systematically without making generalizations or inferences that apply to a broader population. This method focuses on organising and presenting data in a clear and easily understood form, making it easier for researchers to identify patterns, trends, and data distribution. In practice, descriptive statistical analysis involves calculating fundamental values , such as the minimum and maximum values, which indicate the range of data. the average value . as a measure of central tendency. standard deviation, which describes the level of variation or spread of data around the average Thus, descriptive statistics play a crucial role in providing an initial understanding of the 2962 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 characteristics of research data, which serves as the basis for subsequent analysis steps. Below is Table 1, which is the result of descriptive statistical analysis: Table 1. Descriptive Statistics Descriptive Statistics LONG Minimu Institutional Ownership Audit Committee ARLG Valid N . Source: SPSS Output Version 25, 2025 Maxim Mean Std. Deviation Table 1 presents a comprehensive summary of the descriptive statistics, detailing the fundamental attributes of the variables under investigation within companies operating in the primary consumer sector and listed on the Indonesia Stock Exchange during the period from 2019 to 2023. In profitability variable, the lowest value recorded was 1,396. 8627, which came from PT Leyland International. Tbk. (LAPD) in 2021. Conversely, the highest value of profitability was also recorded by the same company in the following year, which was 3,612. The average level of profitability during the observation period was 6. 65 per cent, with a standard deviation of 211. 82, indicating a significant variation between companies in their ability to generate profits. This variation highlights substantial differences in financial performance among companies in the sector during the study period. Furthermore, the institutional ownership variable shows a minimum value of 0. owned by PT Wismilak Inti Makmur. Tbk. (WIIM) in the period 2020 to 2023. The maximum value of institutional ownership was recorded at 0. 9957 at PT Dua Putra Utama Makmur. Tbk. (DPUM) in 2023. The average institutional ownership during the study period was 0. with a standard deviation of 0. 2152, indicating that most of the company's shares are controlled by institutional investors. Still, there is a fairly wide variation in ownership between companies. For the audit committee variable, the minimum value recorded was 1 at PT Wicaksana Overseas International. Tbk. (WICO) in 2022, while the highest threshold value reached 5 by PT Malindo Feedmill. Tbk. (MAIN) during the period 2019 to 2023. In companies in this sector, the average number of audit committee members was 3. 06, with a standard deviation of 424, indicating that the audit committee generally consists of three to four committee members with relatively slight variations. The audit report lag variable recorded the lowest value of 29 days, achieved by PT Unilever Indonesia. Tbk. (UNVR) in 2019, while the highest value was recorded at 272 days by PT Central Proteina Prima. Tbk. (CPRO) in 2020. The average audit report lag duration during the study period was 91. 62 days with a standard deviation of 29. 77 days, indicating a significant difference in audit report completion time between companies in the primary consumer sector. Overall, the results of these descriptive statistics provide a comprehensive initial picture of the characteristics of the analysed data while also confirming the existence of significant variations in each variable studied in this study. The following istableBelow is the results information analysis statistics descriptive to the reputation of KAP: 2963 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 Table 2. StatisticsDescriptive of KAP Reputation KAP Reputation Frequ Valid Cumulative Percent Percent Percent Valid Total Source: SPSS Output Version 25, 2025 Results Analysis: In this study, the reputation of the Public Accounting Firm (KAP) is categorised as a nominal variable, operationalised through the use of dummy variables. This approach allows grouping companies based on the type of KAP they use in the audit process, namely distinguishing between KAPs that are members of the Big Four group and those outside the group. All data used have undergone a strict validation process to ensure their accuracy and reliability, making them suitable for further analysis in the context of this study. Descriptive statistical analysis revealed that the majority of companies in the sample, as many as 182 entities or around 54. 3 per cent, chose to use the services of non-Big Four KAPs. Conversely, as many as 153 companies or 45. 7 per cent, used the services of KAPs included in the Big Four group. This distribution reflects significant variation in auditor selection preferences among primary consumer sector companies listed on the Indonesia Stock Exchange, indicating that not all companies rely on highly reputable KAPs in carrying out their The reputation of accounting firms, particularly those in the Big Four, is closely tied to their superior audit quality. This is due to the availability of greater resources, the implementation of strict quality control standards, and more in-depth professional experience compared to non-Big Four accounting firms. Previous studies support this finding by showing that companies audited by highly reputable accounting firms tend to receive more reliable and timely audit reports. This condition ultimately contributes to increasing the level of stakeholder trust in the financial information presented, which is very important in maintaining the transparency and accountability of companies in the capital market. Thus, the reputation of the KAP not only functions as an indicator of audit quality but also plays a strategic role in shaping the perception and trust of investors and other stakeholders towards the company's financial statements. The variation in the selection of KAP reflected in this data also shows the existence of complex dynamics and considerations in the company's decision-making process regarding the auditor used. However, it is essential to note that the existence of the KAP Big Four does not always guarantee perfect audit quality because other factors, such as audit firm culture, auditor competence, and audit complexity, also play a role. Influence audit results. Therefore, this study considers the reputation of the KAP as one of the essential variables analysed to assess its influence on the dependent variable in the research model. Thus, understanding the distribution of KAP service use based on reputation provides a strong foundation for examining the relationship between auditor reputation and the quality of financial reporting in the Indonesian capital market, especially in the primary consumer sector. Classical Assumption Test The following are the results of the analysis of the classical assumption test presented in Table 3 below: Table 3. Classical Assumption Test Normality Test One Sample Kolmogorov Smirnov Test Multicollinearity Test Tolerance Value X1. X2. X3. 0,200 0,897. 0,947. 0,915. 0,992 2964 | P a g e https://dinastipub. org/DIJEFA Vol. No. 4, 2025 VIF X1. X2. X3. 1,115. 1,056. 1,092. 1,009 Heteroscedasticity Test X1 = 0,906 X2 = 0,287 X3 = 0,146 X4 = 0,852 Autocorrelation Test Du