Three international accounting bodies have joined forces to launch a research initiative that will provide a better understanding of users’ perceptions of the financial statement audit and the auditor’s report. The research is intended to independently examine the perceptions of users of financial statements in countries around the world.
The American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), and the International Auditing and Assurance Standards Board (IAASB) issued a “Request for Proposal” this week, soliciting academic research to identify and provide information about such perceptions.
The AICPA’s Auditing Standards Board (ASB) has a current project to consider whether the auditor’s report should be revised. The IAASB recently completed a project in this regard. The new research findings will provide information that can be used as a basis for any future revisions to the auditor’s report.
“Anecdotal evidence points to financial statement users not consistently understanding communications in an unqualified auditor’s report, but there’s little rigorous evidence to support the anecdotal observations,” said Douglas F. Prawitt, chair of the ASB’s Audit Report Research Task Force and Glen Ardis Professor of Accountancy at Brigham Young University. “This project should provide the required information, as well as anchor any effective modifications necessary to clarify the communication of information to financial statement users.”
Mark Beasley, president of the AAA Auditing Section and a professor at North Carolina State University, added, “We are thinking globally with this project. The plan is for the ASB to select one or more proposals to examine U.S. perceptions and the IAASB to select one or more proposals to examine perceptions internationally. We envision that, once the selected projects are completed, the ASB and IAASB will fund additional research to identify and explore ways in which the auditor’s reports might be revised to communicate more clearly and to address identified user misperceptions.”
Research proposals must be submitted by Oct. 2, 2006 to Sharon Walker, Technical Manager, Audit and Attest Standards, AICPA, 1211 Avenue of the Americas, New York, NY 10036-8775. The “Request for Proposal” may be downloaded from the IAASB homepage at www.iaasb.org.
The ASB and IAASB will fund between US$10,000 and $20,000 for each project. Researchers are required to submit a summary of results to the ASB and IAASB by Oct. 1, 2007, with a more detailed report to be provided to the boards by Jan. 7, 2008. The summary should be tailored toward practitioners, rather than readers of an academic journal. Researchers will have the right to publish the research, so long as the boards are given appropriate credit for research support provided.
© 2006 SmartPros Ltd. All rights reserved. Republished with permission.