The Importance of Clarification of Auditors' Responsibilities Under the New Audit Reporting Standards

被引:15
|
作者
Backof, Ann G. [1 ]
Bowlin, Kendall [2 ]
Goodson, Brian M. [3 ]
机构
[1] Univ Virginia, Charlottesville, VA 22903 USA
[2] Univ Mississippi, University, MS 38677 USA
[3] Clemson Univ, Clemson, SC 29631 USA
关键词
auditor liability; audit report; reasonable assurance; critical audit matter; COUNTERFACTUAL THINKING; CULPABLE CONTROL; PSYCHOLOGY; JUDGMENTS; VERDICTS; OUTCOMES; QUALITY; BLAME; MODEL;
D O I
10.1111/1911-3846.12802
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
Given the uncertainty regarding auditors' responsibilities, standard setters considered the need for clarification of technical terms such as reasonable assurance in the new audit reporting models. The PCAOB ultimately decided to exclude clarifying language from its final standard, while the Auditing Standards Board and IAASB made such language mandatory. Given the difference in reporting models, this study investigates the role clarification of reasonable assurance plays in auditor negligence. We predict and find that, absent clarification, jurors judge auditors to be more negligent when the audit report includes a related critical audit matters disclosure than when it does not. However, consistent with our prediction, clarifying what is meant by reasonable assurance mitigates this increase in auditors' liability exposure by reducing jurors' perceptions of auditors' personal control over the misstatement at the time of the audit. Thus, our evidence suggests that the PCAOB's decision to not include such language in the new audit reporting model may have been shortsighted given the potential for clarification to mitigate a potential negative unintended consequence to auditors' litigation exposure under the new audit reporting model.
引用
收藏
页码:2284 / 2304
页数:21
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