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Perceptions of messages conveyed by review and audit reports

Grant Gay (Department of Accounting and Finance, Monash University, Victoria, Australia)
Peter Schelluch (Department of Accounting and Finance, Monash University, Victoria, Australia)
Annette Baines (Department of Accounting and Finance, Monash University, Victoria, Australia)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Article publication date: 1 October 1998

Abstract

This study compares the perceptions of the users and preparers of financial statements to those of auditors, concerning messages conveyed by review and audit reports. Concern has been expressed about the ability of different groups to differentiate between the level of assurance provided by these engagements. All groups perceived that review reports provided less assurance than audit reports. Users placed less responsibility on the auditor with a review, whilst preparers did not perceive any difference in the auditor’s responsibility. Preparers and users placed a greater responsibility on management than did auditors, for maintaining internal control and accounting records. Auditors had stronger beliefs concerning reliability of the financial information with both reports, reflecting the scepticism of users and preparers and a need for auditors to improve their performance if auditing is to achieve its social function. Auditors also need to improve communication of the level of assurance provided and extent of work performed, and perceptions of auditor independence. The profession’s response to expectation gap issues has been largely defensive. This paper indicates a constructive and proactive approach is needed.

Keywords

Citation

Gay, G., Schelluch, P. and Baines, A. (1998), "Perceptions of messages conveyed by review and audit reports", Accounting, Auditing & Accountability Journal, Vol. 11 No. 4, pp. 472-494. https://doi.org/10.1108/09513579810231493

Publisher

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MCB UP Ltd

Copyright © 1998, MCB UP Limited