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The Unqualified Auditor’s Report: A Study of User Perceptions, Effects on User Decisions and Decision Processes, and
Directions for Future Research

A Summary Report to be discussed at the
Accounting Research Forum
Leventhal School of Accounting
University of Southern California

April 17, 2009

Theodore J. Mock.
University of California, Riverside, and University of Maastricht

Jerry L. Turner,
The University of Memphis

Glen L. Gray
California State University, Northridge

Paul J. Coram
University of Melbourne, Australia

Note: This document is based on a detailed final report (in process) of approximately 200 pages. The research is part of ASB and IAASB efforts to possibly revise standards and guidance for the financial statement auditors’ report. The detailed report provides the more traditional contents of a research study including more detailed discussion of research questions, literature, method, etc. and is available on request.

The authors are particularly interested in comment and suggestions directed at improving our presentation on April 29 to the AICPA ASB and comments as to which of the presented future research questions seem most promising to pursue for a Phase II study.

The Unqualified Auditor’s Report: A Study of User Perceptions, Effects on User Decisions and Decision Processes, and
Directions for Future Research

A Summary Report to the Auditing Standards Board
and the International Auditing and Assurance Standards Board

New York, New York

April 29, 2009

Theodore J. Mock, Ph.D.
University of California, Riverside, and University of Maastricht

Jerry L. Turner, Ph.D., CPA (Inactive), CIA
The University of Memphis

Glen L. Gray, Ph.D., CPA
California State University, Northridge

Paul J. Coram, Ph.D., FCA
University of Melbourne, Australia

Sponsored by the Auditing Standards Board and the
International Auditing and Assurance Standards Board

The Unqualified Auditor’s Report: A Study of User Perceptions, Effects on User Decisions and Decision Processes, and
Directions for Future Research

TABLE OF CONTENTS

1. Research Design1

1.1 Focus Groups1
1.2 Verbal Protocol Analysis (VPA)2

2. Results3

2.1 Focus groups3
2.1.1 Level of Assurance.3
2.1.2 Sampling5
2.1.3 Internal Controls.5
2.1.4 Internal Control Audits.5
2.1.5 Fraud6
2.1.6 Going Concern6
2.1.7 Overall Usefulness of Unqualified Auditor’s Report6 2.1.8 Differences between Auditor Intent and User Perceptions of Intent7 2.2 Verbal Protocol Analysis (VPA)8
2.2.1 VPA Study 18
2.2.2 VPA Study 28

3. Directions for Future Research10

3.1 Information about the audit12
3.2 Quality of the financial statements13
3.3 Quality of the financial reporting system14
3.4 Quality of the client as a business entity14
3.5 Method of Disclosure15

4. Final Comments15

5. References……………………………………………………………………………………18 The Unqualified Auditor’s Report: A Study of User Perceptions, Effects on User Decisions and Decision Processes, and Directions for Future Research

This report provides a synopsis of a project requested and sponsored by the Auditing Standards Board (ASB) and the International Auditing and Assurance Standards Board (IAASB). The project has two primary objectives with the first being to identify and provide insight on the nature and underlying causes of user perceptions regarding the unqualified auditor’s report among various classes of financial statement and auditor’s report users. This objective is achieved in part one of this study. The second objective is to examine if and how an unqualified auditor’s report impacts the judgments of financial statement users. This objective is achieved in part two of this study. Based on our findings, we offer directions for future research on issues that could improve the usefulness of the...
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