Communicating Assurance Using Practitioner-Customized Procedures: An Experiment and Emerging Research Opportunities

Auditing: A Journal of Practice & Theory (Vol. 39, No. 4; 201-222)

45 Pages Posted: 2 Jan 2019 Last revised: 27 Jun 2022

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: November 1, 2020

Abstract

Traditionally, financial and nonfinancial information assurance standards have specified either "high" assurance based on "sufficient evidence" or "moderate" assurance based on analytical procedures and inquiries. Recently, in response to rapidly growing nonfinancial assurance demand, the IAASB extended the possible range of limited assurance by allowing practitioner-customized procedure descriptions and assuming diverse users can "appreciate" the varying reliability achieved. To test the validity of this policy change, we examine report users' confidence judgments for a GHG emissions assurance report using combinations of report attributes: critical practitioner-customized procedure descriptions, conclusion frame, and engagement label. We find that, consistent with an "assurance communication gap," including or explicitly excluding a practitioner-customized procedure deemed essential-for-reasonable assurance does not significantly affect users' confidence judgments. However, we find that both positive conclusion frames and reasonable assurance engagement labels incrementally enhance confidence judgments. We outline research and practice opportunities related to emerging policy prescriptions involving practitioner-customized procedures.

Keywords: Nonfinancial Assurance, Limited Assurance, Sustainability Reporting, Measurement Uncertainty, Conclusion Frame, Communication Gap, Investors' Confidence

JEL Classification: M42, M49

Suggested Citation

Vera-Munoz, Sandra C. and Gaynor, Lisa Milici and Kinney, William, Communicating Assurance Using Practitioner-Customized Procedures: An Experiment and Emerging Research Opportunities (November 1, 2020). Auditing: A Journal of Practice & Theory (Vol. 39, No. 4; 201-222), 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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