This paper offers discussions towards the investors on the new audit report requirement imposed by the International Auditing and Assurance Standards Board (IAASB) in the recent years. The auditing has evolved over the period due to the advancement and the need of the global economy. The regulators and practitioners view that the new audit report as a tool that providing more to the investors including of increasing the transparency of information and audit quality. The new audit report requirement on ISA 701, Communicating Key Audit Matters (KAMs) has required more disclosure from the auditor by reporting the most significant matters in the audit of financial statements for the current period. The three underpinning theories; agency theory, knowledge-based theory of a firm and communication theory are discussed in supporting the theoretical of the new auditor’s report.
Abdolmohammadi, M. J., & Rhodes, J. E. (2002). The Influence of Accounting and Auditing on a Country ’ s Economic Development. Review of Accounting and Finance, 1(3), 42–53.
Alexandra-Laura, M. (2017). Amendments to the Audit Report for the Review of International Standards on Auditing. “Ovidius” University Annals, Economic Sciences Series, XVII(1), 539–544.
Ali, A., Haniffa, R., & Hudaib, M. (2006). Episodes in the Malaysian auditing saga. Managerial Auditing Journal, 21(7), 684–701. https://doi.org/10.1108/02686900610680495
Ali, A., & Lee, T. H. (2008). Malaysia ’ s external auditing: The case of the better tool for analysis. International Journal of Business and Management, 3(9), 99–120.
Antle, R. (1982). The Auditor as an Economic Agent. Journal of Accounting Research, 20(2), 503–527. https://doi.org/10.2307/2490884
Asare, S. K., & Wright, A. M. (2012). Investors’, auditors’, and lenders’ understanding of the message conveyed by the standard audit report on the financial statements. Accounting Horizons, 26(2), 193–217. https://doi.org/10.2308/acch-50138
Ashton, R. H., Willingham, J. J., & Elliott, R. K. (1987). An Empirical Analysis of Audit Delay. Journal of Accounting Research, 25(2), 275. https://doi.org/10.2307/2491018
Baotham, S., & Ussahawanitchakit, P. (2009). Audit independence, quality, and credibility: effects on reputation and sustainable success of CPAs in Thailand. International Journal of Business Research , 9(1). Retrieved from http://www.freepatentsonline.com/article/International-Journal-Business-Research/208535065.html
Booth, A. (1989). The Communications Audit: A Useful Management Tool? Managerial Auditing Journal, 4(2), EUM0000000001748. https://doi.org/10.1108/EUM0000000001748
Brennan, N. M., & Conroy, J. P. (2013). Executive hubris: The case of a bank CEO. Accounting, Auditing & Accountability Journal, 26(2), 172–195. https://doi.org/10.1108/09513571311303701
Chien, W., Mayer, R. W., & Sennetti, John, T. (2010). Audit Committee Effectiveness in the Largest US Public Hospital: An Empirical Study. ACCOUNTING & TAXATION, 2(1), 107–127. Retrieved from ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/acttax/at-v2n1-2010/AT-V2N1-2010-8.pdf
Costouros, G. J. (1978). AUDITING IN THE ATHENIAN STATE OF THE GOLDEN AGE. The Academy of Accounting Historians, 5(1), 41–50. Retrieved from http://www.jstor.org/stable/40697561
Crafts, N. F. (1977). Industrial Revolution in England and France: Some Thoughts on the Question,“Why was England First?” The Economic History Review, 30(3), 429–441.
Cragan, J. F., & Shields, D. C. (1998). Understanding Communication Theory the Communicative Forces for Human Action. Boston: Allyn & Bacon. Retrieved from https://philpapers.org/rec/CRAUCT
Curado, C. (2006). the Knowledge Based-View of the Firm: From Theoretical Origins To Future Implications. Igarss 2014. https://doi.org/10.1007/s13398-014-0173-7.2
Deloitte. (2016). Clear, transparent reporting: The new auditor’s report. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/audit/ch-en-audit-new-auditors-report.pdf
Fama, E. F., & Jensen, M. C. (1983). SEPARATION OF OWNERSHIP AND CONTROL. The Journal of Law, 26(2), 301–325.
Hashim, U. J. B., & Rahman, R. B. A. (2011). Audit report lag and the effectiveness of audit committee among malaysian listed companies. International Bulletin of Business Administration, 10(10), 50–61. Retrieved from https://www.scribd.com/doc/65902120/Audit-Report-Lag-and-the-Effectiveness-of-Audit-Committee-Among-Malaysian-Listed-Companies
Hill, J. G. (2002). Regulatory responses to global corporate scandals. Wisconsin International Law Journal, 23(20), 367–781. https://doi.org/10.3868/s050-004-015-0003-8
IAASB. International Standards on Auditing 701: Communicating Key Audit Matters in the Independent Auditor’s Report, 1 Ifac § (2015).
Kor, Y. Y., & Mahoney, J. T. (2004). Edith Penrose’ s (1959) Contributions to the Resource-based View of Strategic Management. Journal of Manag
In-Text Citation: (Hashim, Ahmad, & Salleh, 2018)
To Cite this Article: Hashim, U. J., Ahmad, N., & Salleh, Z. (2018). Enhancing Investors Knowledge through the New Auditor’s Report Requirement: The Underpinning Theories. International Journal of Academic Research in Business and Social Sciences, 8(12), 658–668.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
