The Use of International Standards on Assurance Engagements (ISAEs) by Practitioners from Outside the Accounting Profession: Public Interest or Risk to Legitimacy?

39 Pages Posted: 12 Sep 2016 Last revised: 24 Apr 2019

See all articles by Qingling Ge

Qingling Ge

University of New South Wales (UNSW)

Roger Simnett

Deakin University; UNSW Australia Business School, School of Accounting

Shan Zhou

The University of Sydney

Date Written: March 27, 2019

Abstract

There is a debate as to whether International Standards on Assurance Engagements (ISAEs) should be restricted to members of the accounting profession or whether it is in the public interest to encourage other assurance providers to use these “best practice assurance statements”. The International Auditing and Assurance Board (IAASB) has determined that public interest would be best served if all competent practitioners were able to use ISAEs to benchmark their work effort, with the requirement that practitioners disclose the ethics and quality control frameworks under which these assurance engagements are undertaken, in order to allow a full assessment of the quality of the assurance engagements. Using a pre-post design on 3,816 assurance engagements from 41 countries, our multivariate analyses identify a significant increase in the use of ISAEs by other assurance providers after IAASB’s decision to expand the use of ISAEs. Supporting our hypotheses, we find that there has been significant improvement to the disclosure of the ethics and quality control frameworks in the assurance reports during the post effective period. However, we still observe 10 (25.25) percent of professional accountants not disclosing the ethics (quality control) frameworks in their assurance reports and only 35.51 (18.12) percent of other assurance providers do disclose ethics (quality control) frameworks in their assurance reports. These findings highlight the dilemma faced by transnational bodies such as the IAASB in serving “public interest” albeit with little power to enforce the use of its standards.

Keywords: Accounting Practitioners, Assurance Engagements, Ethics, Greenhouse Gas, Other Assurance Providers, Quality Control

Suggested Citation

Ge, Qingling and Simnett, Roger and Zhou, Shan, The Use of International Standards on Assurance Engagements (ISAEs) by Practitioners from Outside the Accounting Profession: Public Interest or Risk to Legitimacy? (March 27, 2019). Available at SSRN: https://ssrn.com/abstract=2837397 or http://dx.doi.org/10.2139/ssrn.2837397

Qingling Ge

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Roger Simnett (Contact Author)

Deakin University ( email )

75 Pigdons Road
Victoria, Victoria 3216
Australia

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia
+61 2 9385 5825 (Phone)
+61 2 9385 5925 (Fax)

Shan Zhou

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

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