Are Audit Reports Useful? Get $10K (or more) to Find Out!

The American Institute of Certified Public Accountants (AICPA), American Accounting Association (AAA) and International Accounting and Assurance Standards Board (IAASB) have announced a joint project to see what users think of the present standard auditors' report. The AICPA is considering whether modifications should be made in the standard report while the IAASB has already done some research. AICPA Board Chairman Douglas Prawitt indicates that anecdotal evidence leads to suspicion that the present report is not satisfactorily understandable to external users but more rigorous analysis is needed before necessary changes can be identified and made. The AAA plan is to have at leastone researcher study auditor reports from a U.S. perspective while one or more studies the impact of these reports from an international perspective. Proposals are to be submitted by October 2 of this year with a finished product by the start of 2008. The paper is to be practitioner-oriented rather than academic-oriented and each project approved will receive a $10,000-$20,000 grant.

Although university accounting majors, present CPA exam candidates and audit staff in CPA firms would understandably be uncomfortable with learning a new standard audit report, lack of understandably by users is a very good reason to review and reconsider the audit report. Best wishes to all entrants (perhaps including doctoral candidates taking this as a way to find a dissertation topic).