The Role of Audit Report Lag on The Relationship between Earning Volatility and Audit Fees

earning volatility، which indicates the degree of uncertainty of corporate earnings; One of the factors affecting the audit risk is known and according to research، has a positive role in determining the audit fee. The purpose of this study is to answer the question of whether auditors claim only a premium risk that is not related to the extra effort or due to more effort، they consider themselves entitled to receive a higher fee، or a combination of both factors is involved in this case simultaneously.

The present study is descriptive-correlational study، in terms of purpose applied and using a Ex-Post Facto approach. It is a period from 2014 to 2018 that after screening، the population is limited to 970 firms-years. In this study، using the concurrency estimation approach، the competitor hypotheses of the relationship between earning volatility and lag in the audit report on the one hand and its relationship with the audit fee on the other hand have been investigated.

A significant relationship was observed between earning volatility and audit fees. But no significant relationship was observed between earning volatility and audit report lag. The findings only show that the relationship between earning volatility and audit fees is strengthened in cases where the audit report is issued lag. There was also evidence of a significant positive relationship between audit report lag and audit fees.

Auditors who issue an audit report with more time، without necessarily delay in reporting be response to earning volatility، are only claiming more risk premium.

 The contribution of this study to the development of the existing literature is to explain the distinction between audit fees and audit report lag in reflecting the overall audit risk and to introduce earning volatility as representing the auditor's understanding of inherent risk.