A new audit report for Singapore?

• Main Authors: Chua, Teck Keong., Tee, Soo Jin., Chin, Mee Ngah.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Auditing
• Online Access: http://hdl.handle.net/10356/51930
• Institution: Nanyang Technological University

The audit report is normally the only communication between auditors and users who rely on his opinion about the quality of the financial statements. Thus the impact of its contents and even format cannot be overemphasised. The overall objective of this study was to investigate whether a new expanded auditor’s report similar to those implemented in the US, the UK, Australia and New Zealand in recent years, should also be implemented in Singapore. In the first part of the project, we traced the historical development of the standard unqualified audit report in the US, the UK, Australia, New Zealand and Singapore. We also did a review of previous relevant research. In the second part, we analysed the results of two surveys on the standard unqualified versions of the current and new proposed reports. We surveyed reasonably intelligent users with some knowledge of accounting but who have no formal audit training. We wanted to determine the level of knowledge users derived of auditing from reading the audit report and whether this knowledge level was improved by the new report. We also surveyed auditors of various experience levels from the “Big Six” public accounting firms as to their perceptions of the effectiveness of the new report in improving users’ knowledge, and also as to how they felt that their scope of work and legal liability would be affected. We also compared the results of the two surveys to find out whether auditors’ perceptions of the effectiveness of the new report were in tandem with actual users’ knowledge. Our results showed that overall, the new report was ineffective in improving users’ knowledge of auditing, i.e. that it was ineffective in improving communication. Also users’ knowledge of auditing was found to be very unsatisfactory. In some dimensions of auditing tested, users seemed to have certain wrong perceptions which were not altered by the new report. On the other hand, auditors generally felt that the new report would improve users’ knowledge and also correctly that the new report would not affect their scope of work and legal liability. There exists serious discrepancies in auditors’ perceptions of the effectiveness of the new report in improving users’ knowledge and understanding. Users’ knowledge did not improve with the new report but auditors thought that it would.