Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Bank Directors’ Perceptions of Expanded Auditor's Reports

Bank Directors’ Perceptions of Expanded Auditor's Reports Subsequent to the financial crisis, standard setters developed suggestions for enhancing the audit function, in order to increase financial stability. One related idea is to expand the audit report disclosed to the public, to ensure that it is fit for purpose. This study investigates the impact of expanded audit reports, namely information on the assurance level, materiality levels and key audit matters (KAM), on bank director perceptions of the quality of the financial statements, the audit and the audit report, as well as on their credit approval decisions. We conduct an experiment involving a sample of 105 bank directors and use ANCOVA to determine the predictors of bank director perceptions and decisions. Our findings suggest that disclosing the assurance level has a significantly positive impact. In contrast, we cannot demonstrate a material effect of expanding the audit report to include the materiality level or KAM. As a consequence, standard setters should carefully analyse the effect of additional information before making decisions on expanding the content of the audit report. Such expansions are not necessarily perceived as useful by stakeholders. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

Bank Directors’ Perceptions of Expanded Auditor's Reports

Download PDF
17 pages

Loading next page...
 
/lp/wiley/bank-directors-perceptions-of-expanded-auditor-s-reports-Nurpcm4p5R

References (118)

Publisher
Wiley
Copyright
Copyright © 2016 John Wiley & Sons Ltd
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/ijau.12063
Publisher site
See Article on Publisher Site

Abstract

Subsequent to the financial crisis, standard setters developed suggestions for enhancing the audit function, in order to increase financial stability. One related idea is to expand the audit report disclosed to the public, to ensure that it is fit for purpose. This study investigates the impact of expanded audit reports, namely information on the assurance level, materiality levels and key audit matters (KAM), on bank director perceptions of the quality of the financial statements, the audit and the audit report, as well as on their credit approval decisions. We conduct an experiment involving a sample of 105 bank directors and use ANCOVA to determine the predictors of bank director perceptions and decisions. Our findings suggest that disclosing the assurance level has a significantly positive impact. In contrast, we cannot demonstrate a material effect of expanding the audit report to include the materiality level or KAM. As a consequence, standard setters should carefully analyse the effect of additional information before making decisions on expanding the content of the audit report. Such expansions are not necessarily perceived as useful by stakeholders.

Journal

International Journal of Auditing – Wiley

Published: Jul 1, 2016

Keywords: ; ; ;

There are no references for this article.