Auditors' Reporting Options and Client Disclosure

Posted: 4 Nov 2005

See all articles by Joseph V. Carcello

Joseph V. Carcello

University of Tennessee

Jing Lin

University of Tennessee, Knoxville - College of Business Administration

Kannan Raghunandan

Florida International University (FIU) - School of Accounting

Abstract

Auditors, legislators, and others have recently suggested that audit reporting options be expanded so as to provide better information about expected future events. However, the last action by the Auditing Standards Board (ASB) related to auditor reporting was to reduce the reporting options available to the auditor. In this paper, we examine if the quality of footnote disclosures about pending litigation related loss contingencies deteriorated after SAS No. 79 removed the option available to auditors to issue a modified audit report for uncertainties. We find that there is no difference in the quality of disclosures in periods before and after SAS No. 79 became effective. Our results indicate that reducing reporting options did not have an adverse effect on the quality of financial statement disclosures.

Keywords: Audit Reporting Options, SAS 79, Disclosure Quality

JEL Classification: M41, M49, M45, G38

Suggested Citation

Carcello, Joseph V. and Lin, Jing and Raghunandan, Kannan, Auditors' Reporting Options and Client Disclosure. Research in Accounting Regulation, Vol. 18, 2005, Available at SSRN: https://ssrn.com/abstract=831744

Joseph V. Carcello (Contact Author)

University of Tennessee ( email )

Department of Accounting & Information Management
629 Stokely Management Center
Knoxville, TN 37996-0560
United States
865-974-1757 (Phone)
865-974-4631 (Fax)

Jing Lin

University of Tennessee, Knoxville - College of Business Administration ( email )

453 Haslam Business Building
Knoxville, TN 37996
United States

Kannan Raghunandan

Florida International University (FIU) - School of Accounting ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States
305-348-2582 (Phone)

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