The auditor 's report is one of the crucial means by which the auditor provides a judgement and acceptable assurance on the financial statement to investors and other users of financial statements, which has not changed much since the 1940s. To correspond to the size and complexity of markets that have greatly increased in the past seventy years, and to attract a greater percentage of households to invest in the stock market, a new auditing standard and related amendments to enhance the auditor 's reporting model were proposed for public comment by the U.S. Public Company Accounting Oversight Board (PCAOB) on 13 August 2013. Changes to the audit reporting model require auditors to provide additional information to investors …show more content…
Discuss the impact of changes to the audit reporting models.
In terms of the changes the proposal has brought into light, audit reporting models will be impacted in numerous ways. The changes of disclosing areas of high audit risk within the audit report aim to improve the deficiency of the current audit report model. In this part, the issues of the impact on changes to the audit reporting models will be addressed, including the effects on auditors’ liability, quality and users.
PCAOB proposes disclosure in the audit report of critical audit matters (CAMs), which is concerned to increase auditors’ liability in legal ways. Based on results from reports and articles in which massive experiments and statistics methods was performed, this article will briefly conclude the influence of CAMs on auditors’ liability. According to Christine G, Bowe H and Michael E, CAMs can be grouped into three categories: no CAMs, related CAMs which “related to the litigated issue” and unrelated …show more content…
As a result of the proposed new standard, investors are able to obtain critical audit materials in the report and enhance the interpretation of the audit procedures and its outcomes. They have also been given a greater chance to communicate with the auditors and informed with an expanded scope of auditor reasonable assurance. Meanwhile, it will make a considerable transparency circumstance to reveal more specific information on the reason why auditors conclude the financial risk and other fraud on one company (Ann B, Kendall B, Brian G 2014). In conclusion, there will be more details about audit practice and the reason why such conclusion has been made provided to investors and managers, which would add value to the credibility of the