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Auditors' perceptions of reasonable assurance in audit work and the effectiveness of the audit risk model

Auditors' perceptions of reasonable assurance in audit work and the effectiveness of the audit... Purpose – Though assurance services framework has been defined in the Auditing Standards, the understandability of the concept of reasonable assurance are varied by different auditors. The audit risk model (ARM) that is being used on a worldwide basis to underpin the audit risk of companies, is often being criticized. The purpose of this paper is to assess auditors' perceptions of reasonable assurance in audit work and the effectiveness of the ARM. Design/methodology/approach – Three independent variables are examined: CPA certification, ranks of auditors and gender for their influence on two dependent variables: the perceptions of reasonable assurance in audit work and the effectiveness of the ARM. MANOVA analysis and follow up Discriminant Analysis are employed. Findings – Results reveal that there are significant differences between the perceptions held by auditors of different ranks regarding reasonable assurance in audit work. Partners entertain higher perceptions of reasonable assurance than staff auditors. The “gender” variable does not have an influence on the two dependent variables. Auditors with CPA certifications have higher perceptions of reasonable assurance. There are no differences in the perceptions ratings by different rank of auditors, gender and CPA certifications on the effectiveness of the ARM. The three independent variables have average high‐mean ratings on the effectiveness of the ARM, confirming that the current ARM still can provide an effective assurance. Originality/value – This empirical study revokes the UK study and The Netherlands study. Immediate attention need not be focused on restructuring the ARM. Future contemplation of other important issue such as auditor independence may be considered. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asian Review of Accounting Emerald Publishing

Auditors' perceptions of reasonable assurance in audit work and the effectiveness of the audit risk model

Philip Law
Asian Review of Accounting , Volume 16 (2): 19 – Jul 18, 2008
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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1321-7348
DOI
10.1108/13217340810889951
Publisher site
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Abstract

Purpose – Though assurance services framework has been defined in the Auditing Standards, the understandability of the concept of reasonable assurance are varied by different auditors. The audit risk model (ARM) that is being used on a worldwide basis to underpin the audit risk of companies, is often being criticized. The purpose of this paper is to assess auditors' perceptions of reasonable assurance in audit work and the effectiveness of the ARM. Design/methodology/approach – Three independent variables are examined: CPA certification, ranks of auditors and gender for their influence on two dependent variables: the perceptions of reasonable assurance in audit work and the effectiveness of the ARM. MANOVA analysis and follow up Discriminant Analysis are employed. Findings – Results reveal that there are significant differences between the perceptions held by auditors of different ranks regarding reasonable assurance in audit work. Partners entertain higher perceptions of reasonable assurance than staff auditors. The “gender” variable does not have an influence on the two dependent variables. Auditors with CPA certifications have higher perceptions of reasonable assurance. There are no differences in the perceptions ratings by different rank of auditors, gender and CPA certifications on the effectiveness of the ARM. The three independent variables have average high‐mean ratings on the effectiveness of the ARM, confirming that the current ARM still can provide an effective assurance. Originality/value – This empirical study revokes the UK study and The Netherlands study. Immediate attention need not be focused on restructuring the ARM. Future contemplation of other important issue such as auditor independence may be considered.

Journal

Asian Review of Accounting – Emerald Publishing

Published: Jul 18, 2008

Keywords: Auditors; Financial risk; Modelling; Audit reports; Hong Kong

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