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The art of conversation: the expanded audit report

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  • Miguel Minutti-Meza

Abstract

The new generation of expanded audit reports includes disclosures about significant matters in a company’s financial reporting and its audit. These disclosures are a landmark change in auditors’ responsibility to provide information to the public. I examine expanded reports in various jurisdictions, why they became mandatory, what the evidence from their implementation is, and whether they have fulfilled the expectations of regulators and other stakeholders. Expanded reports are intended to increase the information content and usefulness of audit opinions, to increase external monitoring of auditors and management, and to foster a more open conversation between auditors and users of financial reporting. However, existing regulatory requirements, conflicting auditors’ incentives to provide new information, and evidence from the expanded reports’ implementation call into question whether these objectives have been met. It is my hope that expanded reports are only a first step towards enhanced auditor reporting.

Suggested Citation

  • Miguel Minutti-Meza, 2021. "The art of conversation: the expanded audit report," Accounting and Business Research, Taylor & Francis Journals, vol. 51(5), pages 548-581, July.
    • Handle: RePEc:taf:acctbr:v:51:y:2021:i:5:p:548-581
    DOI: 10.1080/00014788.2021.1932264
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    Cited by:

    1. Smith, Kecia Williams, 2023. "Tell Me More: A content analysis of expanded auditor reporting in the United Kingdom," Accounting, Organizations and Society, Elsevier, vol. 108(C).
    2. Li, Donghui & Xing, Lu & Zhao, Yang, 2022. "Does extended auditor disclosure deter managerial bad-news hoarding? Evidence from crash risk," Journal of Corporate Finance, Elsevier, vol. 76(C).
    3. Duboisée de Ricquebourg, Alan & Maroun, Warren, 2023. "How do auditor rotations affect key audit matters? Archival evidence from South African audits," The British Accounting Review, Elsevier, vol. 55(2).
    4. Chen, Lihong & Xiao, Tingting & Zhou, Jia, 2023. "Do auditor changes affect the disclosure of critical audit matters? Evidence from China," Economic Modelling, Elsevier, vol. 122(C).

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