Judgement in the Singapore statements of auditing guideline

• Main Authors: Ong, Chern Chern, Teoh, Beng Khim, Soh, Sok Ping
• Other Authors: Tan Hun Tong
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Auditing::Ethics
• Online Access: http://hdl.handle.net/10356/64036
• Institution: Nanyang Technological University

The primary duty of auditors is to attest to the truth and fairness of financial information contained in the financial statements. This information may be relied upon by users in making business decisions. Thus it is imperative that the auditor conduct the audit with due care and competence. Extensive judgement is required in performing the audit. As a result, auditing guidelines are issued to assist auditors in the performance of an audit. Unfortunately, the assistance provided by such guidelines is limited by vagueness and ambiguity in certain respects. Hence it is inevitable that judgement is also exercised when interpreting auditing guidelines. Many empirical studies have indicated a link between human judgement and decisionerrors (for example, see Libby, 1981). However, the link between auditing guidelines and the extent of judgement required has rarely been examined. This study attempts to analyse the quantum and nature of judgement required in interpreting the Singapore Statements of Auditing Guideline (SAGs) as well as highlight the link between human judgement and decision-error. A content analysis was performed on a randomly selected sample of 18 Statements of Auditing Guideline. Judgements were coded according to a 7-category framework. It was found that standards, in genera~ contained a large number of vague adjectives and descriptive adverbs requiring judgement to interpret. The nature of judgement also differed according to the level of difficulty of the tasks in the guideline. Our findings highlight the importance of professional judgement, and suggest the need for auditing guidelines to be more specific to increase their usefulness.