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Auditors' Reporting Options and Client DisclosureJoseph V. CarcelloUniversity of Tennessee, Knoxville - College of Business Administration Jing LinUniversity of Tennessee, Knoxville - College of Business Administration Kannan RaghunandanFlorida International University (FIU) - School of Accounting Research in Accounting Regulation, Vol. 18, 2005 Abstract: Auditors, legislators, and others have recently suggested that audit reporting options be expanded so as to provide better information about expected future events. However, the last action by the Auditing Standards Board (ASB) related to auditor reporting was to reduce the reporting options available to the auditor. In this paper, we examine if the quality of footnote disclosures about pending litigation related loss contingencies deteriorated after SAS No. 79 removed the option available to auditors to issue a modified audit report for uncertainties. We find that there is no difference in the quality of disclosures in periods before and after SAS No. 79 became effective. Our results indicate that reducing reporting options did not have an adverse effect on the quality of financial statement disclosures.
Keywords: Audit Reporting Options, SAS 79, Disclosure Quality JEL Classification: M41, M49, M45, G38 Accepted Paper SeriesDate posted: November 4, 2005Suggested CitationContact Information
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