The Art of Conversation: The Expanded Audit Report

59 Pages Posted: 14 Oct 2020

See all articles by Miguel Minutti-Meza

Miguel Minutti-Meza

University of Miami - Department of Accounting

Date Written: October 10, 2020

Abstract

The new generation of expanded audit reports includes disclosures about significant matters in a company’s financial reporting and its audit. These disclosures are a landmark change in auditors’ responsibility to provide information to the public. I examine expanded reports in various jurisdictions, why they became mandatory, what is the evidence from their implementation, and whether they have fulfilled the expectations of regulators and other stakeholders. Expanded reports are intended to increase the information content and usefulness of audit opinions, to increase external monitoring of auditors and management, and to foster a more open conversation between auditors and users of financial reporting. However, existing regulatory requirements, conflicting auditors’ incentives to provide new information, and evidence from the expanded reports’ implementation call into question whether these objectives have been met. It is my hope that expanded reports are only a first step towards enhanced auditor reporting.

Keywords: auditor reports, expanded reports, key audit matters, critical audit matters, disclosure regulation

JEL Classification: M42, M41, M48

Suggested Citation

Minutti-Meza, Miguel, The Art of Conversation: The Expanded Audit Report (October 10, 2020). University of Miami Legal Studies Research Paper No. 3709059, University of Miami Business School Research Paper No. 3709059, Available at SSRN: https://ssrn.com/abstract=3709059 or http://dx.doi.org/10.2139/ssrn.3709059

Miguel Minutti-Meza (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-6287 (Phone)

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