The Effect of ISA 700 (Revised) “The Independent Auditor’s Report on Narrowing the Audit Expectations Gap”: An Empirical Investigation from the Perspectives of Auditors, Preparers of Financial Statements, Investors and Academicians

Husam Khadash, Ibrahim Al-Zoy, Mahmoud Nassar

Abstract


This study aims at determining the effect of amendments to audit report on narrowing the audit expectations gap. It also aims at investigating the importance of these amendments and their contribution in improving disclosure level in the audit reports and that from the perspectives of auditors, preparers of financial statements, investors and academicians. The study also aims at identifying the extent to which these four groups consider that it would be useful for additional information to be added to the audit report. Moreover, this study aims at identifying the extent of homogeneity between the requirements of amended ISA 700 (Revised) and Jordanian Corporate law No. 22 for the year 1997 and its amendments.
To achieve the objectives of this study a questionnaire was developed and distributed to a sample of the four specified groups. The researchers used a set of statistical techniques such as descriptive statistics, one sample T-test, one way ANOVA, and Tukey test to describe the variables and to test the hypotheses.
Results show that the amendments to the audit report have contributed in narrowing the audit expectations gap and improving disclosure. These amendments were considered very important according to the four groups. This study also shows that the four groups consider that it would be useful for additional issues, including the results of examining the internal control system, the extent to which they relied on the internal controls, the materiality level that auditors use, corporate governance, and earnings management, to be reported by the auditor. The study also shows that there are contradictions between the requirements of amended ISA No. 700 and the Jordanian corporate law No. 22, issued in 1997 and its amendments relating to the content of the audit report.

Keywords


ISA 700, Expectations Gaps, Auditors, Institutional Investor

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