Author : F. Kaars Sijpesteijn (336762)
Thesis supervisor : E.A. de Knecht RA
List of abbreviations 5
1. Introduction 7
1.1 Background 7
1.2 Objectives 8
1.3 Problem definition 9
1.4 Methodology 9
1.5 Structure 10
2. Theoretical framework for auditing 12
2.1 Theories of auditing 12
2.1.1 Limperg’s Theory of Inspired Confidence 12
2.1.2 The information theory 13
2.1.3 The insurance theory 13
2.1.4 The agency theory 14
2.1.5 The assurance theory 16
2.2 Other theories 18
2.2.1 Positive Accounting Theory (PAT) 18
2.2.2 Legitimacy theory 19
2.2.3 Stewardship theory 19
2.3 Summary 21
3. The contents of auditing and the audit report 22
3.1 Auditing and assurance services 22
3.1.1 Introduction to auditing and assurance services 22
3.1.2 Audit services 23
3.1.3 The audit process 24
3.2 Introduction to the audit report 24
3.3 Development standard audit report 25
3.4 Form and contents standard audit report 27
3.5 Shortcomings standard audit report 30
3.5.1 Early criticisms short form audit report 30
3.5.2 Principal shortcomings standard audit report 31
3.6 Summary 33
4. Prior research on development audit report (1968 – 2009) 35
4.1 Value relevance standard audit report 35
4.2 Present-day’s recommendations on the audit report 41
4.3 European Commission Green Paper on Audit Policy 43
4.4 The ‘De Wit’ committee report (“Credit Lost”) 47
4.5 Summary 47
5. Outline of the empirical research 48
5.1 Characteristics of the research 48
5.2 Units of analyses 50
5.3 Sampling and data collection 51
5.4 Questionnaire design and data analysis 52
5.5 Summary 53
6. Research results and analyses 54
6.1 The results of the questionnaire 54
6.1.1 The research respondents 54
6.1.2 Audit report - general 56
6.1.3 The nature and scope of the auditor’s work 58
6.1.4 The audit opinion 59
6.1.5 The auditor and auditors’ responsibilities 60
6.1.6 Clarified ISA’s 62
6.1.7 Changes or additions to the audit report 63
6.2 Analyzing the research results 64
6.2.1 Audit report - general 64
6.2.2 The nature and scope of the auditor’s work 64
6.2.3 The audit opinion 65
6.2.4 The auditor and auditors’ responsibilities 66
6.2.5 Changes or additions to the audit report 67
6.3 Summary 68
7. Conclusions 69
7.1 Recapitulation 69
7.2 Comparison with prior studies 70
7.2.1 European Commission Green Paper on Audit Policy 71
7.2.2 Comparison with the research results 72
7.3 Limitations 75
7.4 Recommendations 75
76
1 References 77
Appendix 1: illustrations on audit reports 81
Illustration 1: comparison of old form and new form (SAS No. 58) audit report 81
Illustration 3: ISA (UK and Ireland) 700 (revised) 84
Illustration 4: controleverklaring bij een jaarrekening (Standaard 700) 86
Appendix 2: questionnaire on ISA 700 unqualified audit reports 88
Appendix 3: results of the questionnaire 99
Appendix 4: representation of empirical research literature 101