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    The Audit Reporting Model: Current Research Synthesis and...
    research summary posted March 11, 2015 by Jennifer M Mueller-Phillips, tagged 12.0 Accountants’ Reports and Reporting 
    The Audit Reporting Model: Current Research Synthesis and Implications
    Practical Implications:

    This synthesis, “indicates that users desire more information about the auditor, the audit, the financial statements and aspects of the entity that are related to the financial statements.” Still, it acknowledges that, “important questions remain unanswered regarding various information that users want and that might be disclosed:

    • Which would be useful in decision making?
    • Which would affect the users’ decisions?
    • Which might be confusing or misleading?
    • In what form should the information be disclosed?
    • How would the perceived level of assurance be affected if the information is provided?

    For more information on this study, please contact Theodore J. Mock 


    Theodore J. Mock, Jean Bédard, Paul J. Coram, Shawn M. Davis, Reza Espahbodi, and Rick C. Warne (2013) The Audit Reporting Model: Current Research Synthesis and Implications. AUDITING: A Journal of Practice & Theory: 2013, Vol. 32, No. Supplement 1, pp. 323-351.

    The Audit Reporting Model, The Audit Report, Auditing, Assurance, Expectation Gap, Financial Statements
    Purpose of the Study:

    This research synthesis evaluates relevant research concerning the audit report, specifically what this synthesis refers to as the “expectations gap between what financial statement users expect an audit is delivering and what the audit profession believes it is providing.” This synthesis suggests that the expectations gap, “becomes particularly problematic for auditors when there is a ‘business crisis’ and attention is directed to the role of the auditor. Two related gaps are considered in this synthesis, a communications gap and an information gap. All of these gaps relate to the demand for, understanding of, and use of auditor communications, which is the focus of this synthesis.” As mentioned in the introduction, “The primary objective of this research synthesis is to meet regulators’ and academics’ needs for a review of recent research on the audit reporting model. We also aim at identifying fruitful areas for future academic research on the audit reporting model.”

    Design/Method/ Approach:

    This study is a synthesis of research, with an emphasis on two particular research questions:

    • RQ I: What specific information do investors and other stakeholders want to be included in the audit report?
    • RQ II: How do investors and other stakeholders use and react to existing and other auditor communications currently being considered?

    Research for this synthesis includes archival studies, surveys, semi-structured interviews, a focus group study, and a verbal protocol stud.


    General findings concerning RQ I:

    • Stakeholders deem the audit report as important, but they desire more information about the auditor, the audit, and the financial statements including MD&A.
    • Audit related information desired include auditor independence, audit process, materiality, level of assurance the auditor is providing, and entity-related information including accounting policies and risk-related information.

    General findings concerning RQ II:

    • Evidence suggests that wording differences implemented in audit reports in the late 1980s to better explain auditors’ and managers’ responsibilities  exacerbate the expectation gap in certain areas
    • Research finds that disclosure of going-concern modifications does not appear to have information content to users once the underlying information is disclosed in the notes to the financial statements, but the internal control reporting is useful and value relevant to the market
    • Evaluating the difference between the expectation gap and the generally positive assessment of other types of assurance reports may provide some insight into how to improve the communicative value of audit reports
    Accountants' Reporting