Accounting and Auditing
Abstract
Auditing plays a crucial role in the business environment by providing assurance services
to the public so as to decrease information risk by increasing the reliability of financial information
provided by the business entities. As the final product of the audit, the audit report is a way by which
the auditor communicates with the public the findings of the audit process. The auditor’s report is the
only aspect of the work of auditor that can be available to the public. Thus, users are likely to assess
the auditor’s professionalism and competence by this report. The purpose of this study is to address
the meaning and implication of the audit report in addition to a discussion of the messages perceived
from the auditor’s report. Differences in perceptions of the meaning of the auditor’s report may exist
between the auditors and users. Users may misperceive the nature and scope of the audit function and
the level of assurance when they read the audit report.
References
Kelly, Anne S. & Mohrweis, Lawrence C. (1989). Bankers’ and investors’ perceptions of the
auditor’s role in financial statement reporting: The impact of SASNo. 58. Auditing: A Journal of
Practice & Theory, Vol. 9, No. 1, pp. 87-97.
Bailey, K.E,; Bylinski, Joeph. H. & Shield., Michael D. (1983). Effects of audit report wording
changes on the perceived message. Journal of Accounting Research, Vol. 21, No. 2, pp. 355-370.
Best, Peter J. Buckby, Sherrena, Tan, Clarice, (2001). Evidence of the Audit Expectation Gap in
Singapore. Managerial Auditing Journal, Vol. 16, pp. 134-144.
Boyd, D. T., Boyd, S. C, Boyd, W. L, (2001). The audit report: A misunderstanding gap between
users and preparers, National Public Accountant,
http://connection.ebscohost.com/c/articles/3998774/audit-report-misunderstanding-gap-betweenusers-
preparers.
Chong, Kar-Ming & Pflugrath, Gary (2008). Do Different Audit Report Formats Affect Shareholders’
and Auditors’ Perceptions? International Journal of Auditing, Vol. 12, pp. 221-241.
Dixon, R., Woodhead, A.D. & Soliman, M. (2006). An Investigation of the Expectation Gap in
Egypt. Managerial Auditing Journal, Vol. 21, No. 3, pp. 293-302.
Elder Beasley, Arens, A.A. (2010). Auditing and Assurance Services : An Integrated Approach. 13th
Edition, Prentice Hall, Upper Saddle River.
Fadzly, Mohamed Nazri & Ahmad, Zauwiyah (2004). Audit expectation gap: the case of Malaysia.
Managerial Auditing Journal,Vol. 19, No. 7, pp. 897-915.
Geiger, Marshall A., Raghunandan, K. & Rama, Dasaratha V. (2005). Recent Changes in the
Association between Bankruptcies and Prior Audit Opinions. Auditing: A Journal of Practice &
Theory. Vol. 14, No. 2, pp. 54-73.
Nogler, George E. (1995). The Resolution of the Auditor’s going Concern Opinions. Auditing: A
Journal of Practice & Theory, Vol. 14, No. 2, pp. 54-73.
Gist, Willie E., ClainGuy Mc, Shastri, Trimbak (2004). User Versus Auditor Perceptions of the
Auditor’s Report on Internal Control: Readability, Reliability and Auditor Legal Liability. American
Business Review, Vol. 22, June, pp. 117-129.
Gold, Anna Gronewold, Ulfert Pott, Christiane (2012). Financial Statement Users’ Perceptions of the
IAASB’s ISA 700 Unqualified Auditor’s Report in Germany and the Netherlands. Summary Report to
the Auditing Standards Board, and the International Auditing and Assurance Standards Board. New
York. http://www.ifac.org/sites/default files/downloads/Study_4_ASB/ Report.pdf, 07/4/2014.
Gowthorpe, C., & Porter, B. (2002). Audit expectation - Performance Gap in the United Kingdom in
1999 and Comparison with the Gap in New Zealand in 1989 and in 1999, Executive Summary. The
Institute of Chartered Accountants of Scotland, Retrieved from
[http://www.icas.org.uk/site/cms/contentviewarticle.asp?article=3521] 10/5/2014.
Guy, Dan M., Sullivan, Jerry, D. (1988). The Expectation Gap Auditing Standards. Journal of
Accountancy, Vol. 165, No. 4, pp. 36-44.
Hatherly, David Innes & John Brown Tom (1991). The expanded audit report – an empirical
investigation. Accounting and Business Research, Vol 21, No. 84, pp. 311-319.
ISA 700, Forming an Opinion and Reporting on Financial Statements.
ISA 570, Going Concern.
Koh, Hian, Chye, Woo, E-Sah (1998). The Expectation Gap in Auditing. Managerial Auditing
Journal, Vol. 1 3, No. 3, pp. 147-154.
Lee, T.H., Gloeck, J.D., Palaniappan, A.K. (2007). The Audit Expectation Gap: An Empirical Study
in Malaysia. The Southern African Journal of Accountability an Auditing Research, Vol. 7, No. 1, pp.
1-15.
Lin, Z Jin Chen, Feng (2004). An Empirical Study of Audit Expectation Gap in the People’s Republic
of China. International Journal of Auditing, Vol. 8, pp. 93-115.
McEnroe, John E, Martens, Stanley C. (2001). Auditors’ and Investors’ Perceptions of the
Expectation Gap. Accounting Horizons, Vol. 15, No. 4, pp. 345-385.
Miller, Jeffrey R., Reed, Sarah, A., & Strawser, Robert H. (1993). Bank loan officers’ perceptions of
the new audit report. Accounting Horizons, Vol. 7, No. 1, pp. 39-52.
Nair, R.D. & Rittenberg, Larry E. (1987). Messages perceived from audit, review, and compilation
reports: Extension to more diverse groups. Auditing: A Journal of Practice & Theory, Vol. 7, No. 1,
pp. 15-38.
Nogler, George E. (2008). Going concern modifications, CPA firm size and the Enron effect.
Managerial Auditing Journal, Vol. 23, No. 1, pp. 51-67.
Porter, Prenda, Simon, Jon Hathery, David (2008). Principles of External Auditing. 3rd Edition, John
Wiley & Sons.
Raghunandan, K., Rama, D. V. (1995). Audit Reports for Companies in Financial Distress: Before
and After SAS No. 59. Auditing: A Journal of Practice & Theory, Vol. 14, No. 1 Spring, pp. 50-63.
Sarbanes Oxley Act (2002).
auditor’s role in financial statement reporting: The impact of SASNo. 58. Auditing: A Journal of
Practice & Theory, Vol. 9, No. 1, pp. 87-97.
Bailey, K.E,; Bylinski, Joeph. H. & Shield., Michael D. (1983). Effects of audit report wording
changes on the perceived message. Journal of Accounting Research, Vol. 21, No. 2, pp. 355-370.
Best, Peter J. Buckby, Sherrena, Tan, Clarice, (2001). Evidence of the Audit Expectation Gap in
Singapore. Managerial Auditing Journal, Vol. 16, pp. 134-144.
Boyd, D. T., Boyd, S. C, Boyd, W. L, (2001). The audit report: A misunderstanding gap between
users and preparers, National Public Accountant,
http://connection.ebscohost.com/c/articles/3998774/audit-report-misunderstanding-gap-betweenusers-
preparers.
Chong, Kar-Ming & Pflugrath, Gary (2008). Do Different Audit Report Formats Affect Shareholders’
and Auditors’ Perceptions? International Journal of Auditing, Vol. 12, pp. 221-241.
Dixon, R., Woodhead, A.D. & Soliman, M. (2006). An Investigation of the Expectation Gap in
Egypt. Managerial Auditing Journal, Vol. 21, No. 3, pp. 293-302.
Elder Beasley, Arens, A.A. (2010). Auditing and Assurance Services : An Integrated Approach. 13th
Edition, Prentice Hall, Upper Saddle River.
Fadzly, Mohamed Nazri & Ahmad, Zauwiyah (2004). Audit expectation gap: the case of Malaysia.
Managerial Auditing Journal,Vol. 19, No. 7, pp. 897-915.
Geiger, Marshall A., Raghunandan, K. & Rama, Dasaratha V. (2005). Recent Changes in the
Association between Bankruptcies and Prior Audit Opinions. Auditing: A Journal of Practice &
Theory. Vol. 14, No. 2, pp. 54-73.
Nogler, George E. (1995). The Resolution of the Auditor’s going Concern Opinions. Auditing: A
Journal of Practice & Theory, Vol. 14, No. 2, pp. 54-73.
Gist, Willie E., ClainGuy Mc, Shastri, Trimbak (2004). User Versus Auditor Perceptions of the
Auditor’s Report on Internal Control: Readability, Reliability and Auditor Legal Liability. American
Business Review, Vol. 22, June, pp. 117-129.
Gold, Anna Gronewold, Ulfert Pott, Christiane (2012). Financial Statement Users’ Perceptions of the
IAASB’s ISA 700 Unqualified Auditor’s Report in Germany and the Netherlands. Summary Report to
the Auditing Standards Board, and the International Auditing and Assurance Standards Board. New
York. http://www.ifac.org/sites/default files/downloads/Study_4_ASB/ Report.pdf, 07/4/2014.
Gowthorpe, C., & Porter, B. (2002). Audit expectation - Performance Gap in the United Kingdom in
1999 and Comparison with the Gap in New Zealand in 1989 and in 1999, Executive Summary. The
Institute of Chartered Accountants of Scotland, Retrieved from
[http://www.icas.org.uk/site/cms/contentviewarticle.asp?article=3521] 10/5/2014.
Guy, Dan M., Sullivan, Jerry, D. (1988). The Expectation Gap Auditing Standards. Journal of
Accountancy, Vol. 165, No. 4, pp. 36-44.
Hatherly, David Innes & John Brown Tom (1991). The expanded audit report – an empirical
investigation. Accounting and Business Research, Vol 21, No. 84, pp. 311-319.
ISA 700, Forming an Opinion and Reporting on Financial Statements.
ISA 570, Going Concern.
Koh, Hian, Chye, Woo, E-Sah (1998). The Expectation Gap in Auditing. Managerial Auditing
Journal, Vol. 1 3, No. 3, pp. 147-154.
Lee, T.H., Gloeck, J.D., Palaniappan, A.K. (2007). The Audit Expectation Gap: An Empirical Study
in Malaysia. The Southern African Journal of Accountability an Auditing Research, Vol. 7, No. 1, pp.
1-15.
Lin, Z Jin Chen, Feng (2004). An Empirical Study of Audit Expectation Gap in the People’s Republic
of China. International Journal of Auditing, Vol. 8, pp. 93-115.
McEnroe, John E, Martens, Stanley C. (2001). Auditors’ and Investors’ Perceptions of the
Expectation Gap. Accounting Horizons, Vol. 15, No. 4, pp. 345-385.
Miller, Jeffrey R., Reed, Sarah, A., & Strawser, Robert H. (1993). Bank loan officers’ perceptions of
the new audit report. Accounting Horizons, Vol. 7, No. 1, pp. 39-52.
Nair, R.D. & Rittenberg, Larry E. (1987). Messages perceived from audit, review, and compilation
reports: Extension to more diverse groups. Auditing: A Journal of Practice & Theory, Vol. 7, No. 1,
pp. 15-38.
Nogler, George E. (2008). Going concern modifications, CPA firm size and the Enron effect.
Managerial Auditing Journal, Vol. 23, No. 1, pp. 51-67.
Porter, Prenda, Simon, Jon Hathery, David (2008). Principles of External Auditing. 3rd Edition, John
Wiley & Sons.
Raghunandan, K., Rama, D. V. (1995). Audit Reports for Companies in Financial Distress: Before
and After SAS No. 59. Auditing: A Journal of Practice & Theory, Vol. 14, No. 1 Spring, pp. 50-63.
Sarbanes Oxley Act (2002).
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Published
2021-05-28
How to Cite
Collective Authors. (2021). Accounting and Auditing: Array. Acta Universitatis Danubius. Œconomica, 10(5). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1086
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