We report on the results of an experiment, in which experienced auditors and users (financial analysts as sophisticated users and students as unsophisticated users) read a brief company description, a summary of the firm¿s financial statements, and an audit report, the latter of which we manipulated as being either the complete auditor¿s report according to the revised ISA 700 or a short-form audit opinion-only version. Participants then responded to questions related to the perceived responsibility of the auditor versus management for producing the financial statements, detecting and preventing fraud, the soundness of the firm¿s internal control structure, etc.; and to the reliability of the financial statements with respect to misstatements, fraud, errors, etc. We find strong evidence for a persisting audit expectation gap between auditors and financial statement users under the revised ISA 700 auditor¿s report. Also, results are robust in indicating that the detailed explanations of the ISA 700 auditor¿s report of auditor versus management responsibilities and the task and scope of the audit are not effective in reducing this expectation gap, and partially even have a detrimental effect.
|Title of host publication||Proceedings of the Fifth European Auditing Research Network Symposium|
|Editors||M.A. García Benau|
|Place of Publication||Valencia, Spain|
|Publisher||University of Valencia|
|Publication status||Published - 29 Oct 2009|