The role of sharia supervisory boards in reducing audit report lag: Evidence from Indonesian Islamic banks

This research is motivated by the importance of the role of the Sharia Supervisory Board (DPS) in the governance of Islamic banks, especially in influencing Audit Report Lag (ARL) or delay in the issuance of audit reports. Delays in audit reports can have an impact on investor confidence, market efficiency, and regulatory compliance The purpose of this study is to analyze the influence of DPS size, meeting frequency, doctoral qualifications of DPS members, and cross-membership on ARL in Islamic banks in Indonesia. The research uses a quantitative approach with a causal-comparative method. Secondary data was obtained from the annual reports of 14 Islamic banks in Indonesia during the 2017–2023 period. Using panel data of 85 observations, the analysis was carried out through a Random Effect Model (REM) model using multiple regression, after going through a series of model tests (Chow, Hausman, and LM test). Independent variables include DPS size, meeting frequency, doctoral qualifications, and cross-membership, while dependent variables are ARLs measured based on the difference between the end of the fiscal year and the date the audit report is published. The results of the study showed that the size of the DPS and the frequency of meetings had a significant negative effect on the ARL, which means that the larger the number of DPS members and the more frequent meetings were held, the faster the audit process was completed. In contrast, doctoral qualifications and DPS cross-membership had no significant effect on ARL. These findings indicate that the effectiveness of sharia supervision is more influenced by structural aspects and the level of active involvement, rather than solely by academic background or dual membership. Thus, it can be concluded that to improve the efficiency of financial reporting, Islamic banks need to pay attention to the proportional composition of DPS and encourage optimal meeting frequency. Regulations and governance policies should also be directed at increasing the active participation of DPS rather than only emphasizing formal qualifications.