The Impact of an Expanded Auditor’s Report on the Stakeholders

Abstract

Considering the stakeholders’ increasing demand for more information, the International Auditing and Assurance Standard Board, in its quest to bridge the expectation gap, introduced a new expanded audit report format. However, whether this new audit report format is effective in meeting stakeholders’ needs is a significant question that regulators, standard setters and academics are interested in evaluating. This paper aims to examine the impact of the expanded auditor’s reports on stakeholders. The study adopts a qualitative approach and is based on an assessment of previous research conducted on the new audit report standards and the audit report’s implications for stakeholders. The research findings suggest that the inclusion of enhanced information on auditor’s responsibility, understandability of audit report information and the addition of critical information and post-implementation experience are important aspects influencing the effectiveness of the auditor’s report. This study contributes with some key elements that can be helpful to standard setters, regulators, and academics who intend to develop recommendations to make auditor's reports more robust and effective for end-users.

Keywords

• audit
• audit report
• audit expectation gap
• expanded audit report
• isa 701
• stakeholders