How Could the Auditor’s Communication with External Parties Be Improved
Abstract
This report focuses on ways to improve communication between auditors and external users via audit report. Problems with current audit report are identified and two alternatives are proposed, which are: • Short-form audit report • Free-form audit report The report also evaluates these two alternatives respectively and concludes that before any change in relevant legislation and social environment, it is feasible for professions to make the report more concise and readable while the introducing of ‘free-form’ report will be excessively challenging.
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1.Introduction 2.Methodology 3.Shorten the audit report
3.1. 3.2. A movement backwards Evaluation 3.2.1.Cross-referencing 3.2.2.Other ways to educate the society 3.3. Summary
4 4 4
4 5 5 5 6
4.Free-form audit report
4.1. 4.2. Information that expected by shareholders Evaluation 4.2.1.Confusion caused by the ‘free-form’ 4.2.2.Legal and confidentiality 4.2.3.The feasibility of a free form audit report 4.2.4.Alternatives to gain information 4.3. Summary
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6 6 6 7 7 7 7
5.Conclusion 6.Reference 7.Appendix
7.1. 7.2. 7.3. 7.4. Appendix I Appendix II Appendix III Appendix Iv
8 9 10
10 12 13 14
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1.Introduction
The current long-form audit report(which is illustrated in appendix I) has been subjected to a growing amounts of criticism. It is indicated in the research conducted by the AQF’s Working Group (AQF Working Group: AQF 2007), that the standardised wording and unduly long report demotivated the financial report users to read the report in detail, instead, the report is treated as a symbol representing a clean bill of health. Also, the beneficiaries invoke that the audit report should be more informative. Information previously was merely reported to the audit committee or directors should also be reported to shareholders. Therefore, it is vital for auditing professions to take steps to make auditors’ reports less standardised and more informative.
2.Methodology
Relevant
This report focuses on ways to improve communication between auditors and external users via audit report. Problems with current audit report are identified and two alternatives are proposed, which are: • Short-form audit report • Free-form audit report The report also evaluates these two alternatives respectively and concludes that before any change in relevant legislation and social environment, it is feasible for professions to make the report more concise and readable while the introducing of ‘free-form’ report will be excessively challenging.
2
1.Introduction 2.Methodology 3.Shorten the audit report
3.1. 3.2. A movement backwards Evaluation 3.2.1.Cross-referencing 3.2.2.Other ways to educate the society 3.3. Summary
4 4 4
4 5 5 5 6
4.Free-form audit report
4.1. 4.2. Information that expected by shareholders Evaluation 4.2.1.Confusion caused by the ‘free-form’ 4.2.2.Legal and confidentiality 4.2.3.The feasibility of a free form audit report 4.2.4.Alternatives to gain information 4.3. Summary
6
6 6 6 7 7 7 7
5.Conclusion 6.Reference 7.Appendix
7.1. 7.2. 7.3. 7.4. Appendix I Appendix II Appendix III Appendix Iv
8 9 10
10 12 13 14
3
1.Introduction
The current long-form audit report(which is illustrated in appendix I) has been subjected to a growing amounts of criticism. It is indicated in the research conducted by the AQF’s Working Group (AQF Working Group: AQF 2007), that the standardised wording and unduly long report demotivated the financial report users to read the report in detail, instead, the report is treated as a symbol representing a clean bill of health. Also, the beneficiaries invoke that the audit report should be more informative. Information previously was merely reported to the audit committee or directors should also be reported to shareholders. Therefore, it is vital for auditing professions to take steps to make auditors’ reports less standardised and more informative.
2.Methodology
Relevant