Assessing the Impact of the New Auditor's Report

34 Pages Posted: 12 Feb 2018

See all articles by Hong (Alice) Li

Hong (Alice) Li

University of Auckland

David Hay

University of Auckland - Business School

David Lau

University of Auckland

Date Written: February 8, 2018

Abstract

Changes to the auditor’s report have been proposed and issued internationally to provide more relevant information to users and enhance the perceived value of financial statement audits. This study investigates the impact of audit reporting changes on audit quality and audit fees in the New Zealand context. The new and revised audit reporting standards became effective for listed company financial statement audits in New Zealand on or after 15th December 2016. Our evidence suggests they were followed by an improvement in audit quality as proxied by a reduction in absolute abnormal accruals upon the adoption of the new audit reporting requirements. There was also a significant increase in audit fees. Although the new auditor reporting requirements are associated with improvements in audit quality, such benefit does not come without cost.

Keywords: Auditing, audit report, enhanced audit report, key audit matters, partner signature

JEL Classification: G18, G28, L38, L84, L89, M42

Suggested Citation

Li, Hong (Alice) and Hay, David and Lau, David, Assessing the Impact of the New Auditor's Report (February 8, 2018). Available at SSRN: https://ssrn.com/abstract=3120822 or http://dx.doi.org/10.2139/ssrn.3120822

Hong (Alice) Li

University of Auckland ( email )

12 Grafton Road
Auckland, 1010
New Zealand

David Hay (Contact Author)

University of Auckland - Business School ( email )

12 Grafton Rd
Auckland, 1010
New Zealand

David Lau

University of Auckland ( email )

12 Grafton Road
Auckland, 1010
New Zealand

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