Can Customized Procedure Descriptions Communicate Information Credibility? Conflicting Nonfinancial Assurance Standards

52 Pages Posted: 2 Jan 2019

See all articles by Sandra C. Vera-Munoz

Sandra C. Vera-Munoz

University of Notre Dame - Department of Accountancy

Lisa Milici Gaynor

University of South Florida - School of Accountancy

William R. Kinney, Jr.

University of Texas at Austin - Department of Accounting

Date Written: December 13, 2018

Abstract

The IAASB maintains that expert assurance practitioners are unable to quantify limited assurance achieved for nonfinancial information and presumes users can read practitioner-customized procedure descriptions to differentiate information reliability between “inconsequential” and “high.” Can non-expert users do what assurance professionals cannot?

The answer is important because (a) demand for reliable nonfinancial information is growing and the assurance achieved is critical to information value, (b) no cited research or other basis supports the IAASB’s presumption regarding typical users’ ability to quantify information reliability, and (c) the IAASB’s standard conflicts with other assurance standards for nonfinancial and financial information.

We conduct an experiment to isolate effects of customized procedure descriptions, conclusion frames, and engagement labels. We find participants’ confidence judgments are not significantly influenced by important differences in customized procedure descriptions, but are influenced by conclusion frame and by engagement labels, implying an important credibility communication gap for customized procedure descriptions standards.

Keywords: Nonfinancial Assurance, Limited Assurance, Customized Verification, Measurement Uncertainty, Negative Frame Conclusion, Communication Gap

JEL Classification: M42, M49

Suggested Citation

Vera-Munoz, Sandra C. and Gaynor, Lisa Milici and Kinney, William, Can Customized Procedure Descriptions Communicate Information Credibility? Conflicting Nonfinancial Assurance Standards (December 13, 2018). Available at SSRN: https://ssrn.com/abstract=3301007 or http://dx.doi.org/10.2139/ssrn.3301007

Sandra C. Vera-Munoz (Contact Author)

University of Notre Dame - Department of Accountancy ( email )

248 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-9041 (Phone)
574-631-5255 (Fax)

Lisa Milici Gaynor

University of South Florida - School of Accountancy ( email )

4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States

William Kinney

University of Texas at Austin - Department of Accounting ( email )

Austin, TX 78712
United States
512-471-3632 (Phone)
512-471-3904 (Fax)

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