ABSTRACT

Government financial reports are often released six months or more after the reporting government's fiscal year-end, and this lag limits usefulness. In a sample of 1,693 Illinois local governments, we examine the determinants of total reporting lag, bifurcating it into two distinct components: (1) audit report lag (ARL), i.e., fiscal year-end to the audit report date, and (2) regulatory reporting lag (RRL), i.e., the audit report date to submission with the State of Illinois Office of the Comptroller. These governments are required to provide regulatory filings in both PDF format and as digital financial information within 180 days of fiscal year-end. We find that prior year ARL is the biggest determinant of current year ARL and that audit firm expertise is associated with shorter ARL. In contrast, audit firm expertise is associated with longer RRL, as is slack, i.e., the number of days left in the 180-day reporting window, suggesting that balancing the demands of multiple government clients is a factor in filing time. Given recent developments in government reporting taxonomies, XBRL is well positioned as a tool to eliminate the RRL by automating the post-audit process, resulting in the timelier release of information in a consumable format to external users.

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