Do Contrasting Statements Improve Users' Understanding of Different Assurance Levels Conveyed in Assurance Reports?

16 Pages Posted: 18 Feb 2012

See all articles by Kin‐Yew Low

Kin‐Yew Low

affiliation not provided to SSRN

El'fred Boo

Nanyang Business School, Nanyang Technological University

Date Written: March 2012

Abstract

We investigate in an experiment the effects of including statements contrasting the amount of assurance evidence collected and the relative level of assurance provided (‘contrasting statements’) on users' assurance assessment. We manipulated between subjects the type of assurance reports (limited versus reasonable assurance) and the presence of contrasting statements in the assurance report (with versus without). We also measured the participants' assurance knowledge (less versus more informed). We find that, under the current reporting regime which requires the inclusion of contrasting statements only in limited assurance reports, only more informed users can differentiate the extent of assurance conveyed in limited versus reasonable assurance reports. Extending the requirement of contrasting statements to reasonable assurance reports enables both less and more informed users to make stronger discerning assurance assessments between limited and reasonable assurance reports. We also find that users cannot distinguish between limited and reasonable assurance reports without contrasting statements. Overall results suggest that contrasting statements improve users' understanding of the different assurance levels conveyed in limited and reasonable assurance reports.

Keywords: Assurance, audit report, auditing standards, audit expectation gap, regulation, education/training

Suggested Citation

Low, Kin‐Yew and Boo, El'fred Hian Yong, Do Contrasting Statements Improve Users' Understanding of Different Assurance Levels Conveyed in Assurance Reports? (March 2012). International Journal of Auditing, Vol. 16, Issue 1, pp. 19-34, 2012, Available at SSRN: https://ssrn.com/abstract=2007352 or http://dx.doi.org/10.1111/j.1099-1123.2011.00439.x

Kin‐Yew Low (Contact Author)

affiliation not provided to SSRN

No Address Available

El'fred Hian Yong Boo

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

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