Does Recent Academic Research Support Changes to Audit Reporting Standards?

Posted: 18 Jul 2015 Last revised: 2 Jun 2016

See all articles by Jean Bédard

Jean Bédard

Université Laval - École de comptabilité

Paul Coram

University of Adelaide - Business School; Financial Research Network (FIRN)

Reza Espahbodi

Christopher Newport University

Theodore J. Mock

University of Southern California; University of California, Riverside

Abstract

The Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB) and UK Financial Reporting Council (FRC) have proposed or approved standards that significantly change the independent auditor’s report. These initiatives require the auditor to make additional disclosures intended to close the information gap, that is the gap between the information users desire and that that is available through the audited financial statements, other corporate disclosures, and the auditor‘s report. They are also intended to improve the relevancy of the auditor’s report.

We augment prior academic research by providing standard setters with an updated synthesis of relevant research. More importantly, we provide an assessment of whether the changes are likely to close the information gap, which is important to financial market participants and other stakeholders in the audit reporting process. Also, we identify areas where there seems to be a lack of sufficient research.

These results are of interest to all stakeholders in the audit reporting process as the changes to the auditor’s report are fundamental. Additionally, our summaries of research on the auditor’s report highlight where there is limited research or inconsistent results, which will help academics identify important opportunities for future research.

Keywords: auditor report, audit reporting model, PCAOB, IIASB

JEL Classification: G38, M42, M48

Suggested Citation

Bédard, Jean and Coram, Paul J. and Espahbodi, Reza and Mock, Theodore J., Does Recent Academic Research Support Changes to Audit Reporting Standards?. Accounting Horizons, January 2016, Available at SSRN: https://ssrn.com/abstract=2631676 or http://dx.doi.org/10.2139/ssrn.2631676

Jean Bédard

Université Laval - École de comptabilité ( email )

2325, rue de la Terrasse
Québec, Québec G1V 0A6
Canada
418-656-7055 (Phone)
418-656-2624 (Fax)

Paul J. Coram

University of Adelaide - Business School ( email )

10 Pulteney Street
Adelaide, South Australia 5005
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Reza Espahbodi (Contact Author)

Christopher Newport University ( email )

Luter School of Business
1 Avenue of the Art
Newport News, VA VA 23606
United States
7575949197 (Phone)
23606 (Fax)

HOME PAGE: http://cnu.edu

Theodore J. Mock

University of Southern California ( email )

Los Angeles, CA 90089-0441
United States

University of California, Riverside ( email )

Riverside, CA 92521
United States

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