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The Changing Face of the Auditor's Report: Implications for Suppliers and Users of Financial Statements
Author(s) -
Prasad Pranil,
Chand Parmod
Publication year - 2017
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12137
Subject(s) - accounting , audit , business , joint audit , auditor independence , audit evidence , audit plan , auditor's report , quality audit , chief audit executive , liability , information technology audit , relevance (law) , external auditor , internal audit , political science , law
The International Auditing and Assurance Standards Board (IAASB) recently finalised several significant and controversial reforms of the audit reporting model. The reforms are in response to long‐standing criticisms about the form and content of the existing audit report. This study critically examines the current audit report reforms and their implications. In particular, we investigate the perceptions of prominent stakeholders in respect of these reforms and then evaluate the implications of the reforms on the informational value of the audit report, audit quality and audit costs. The findings suggest that the changes to the audit report are of significant informational value to users, while the implications for audit quality are unclear. Indeed, the changes would increase audit costs and potentially the legal liability of auditors. This appraisal is timely given the efforts made by the IAASB in commissioning these reforms to enhance the relevance and informational value of the audit report.