The readability of international illustration of auditor's report: An advanced reflection on the compromise between normative principles and linguistic requirements

Abstract

Content of audits Understandability Readability and determinants of legibility a b s t r a c tThe independent auditors periodically publish reports that summarize the audit results. These reports reinforce the financial communication and reliability of accounting information. International Standards on Auditing (ISA) determine the content of audit reports and the quality of audit results. Theoretically, the audit standardization must model intelligible and clear reports for readers. Compliance with linguistic principles contributes to the improvement of the structure of audit reports. In practice, the effectiveness of these reports is criticized because users do not understand the audit information. In order to improve the content of audit reports, International Federation of Accountants (IFAC) had revised International Standards on Auditor's report: ISA 700: Forming an opinion and reporting on financial statements. Linguistically, standardized audit reports could be unreadable by many users of financial statements. This article discusses the linguistic problems related to the preparation of reports. This discussion focuses on the audit reports which are illustrated by the International Standards on Auditing. The results show that in the presence of conflicting requirements (auditing standards versus linguistic principles), independent auditors must optimize the presentation of their reports.

Exploring asymmetric relationship between Islamic banking development and economic growth in Pakistan: Fresh evidence from a non‐linear ARDL approach

“…Farooq and Zaheer (2015) delineated that IBs in Pakistan witnessed fewer withdrawals compared to CBs during the financial crisis of 2008. They observed that some of the IBs even recorded an increase in their deposits in Pakistan during the financial panic time and the same phenomenon was observed globally (Ernst and Young, 2016; Fakhfakh, 2015; Mensi et al, 2019). As a result, the IBs supplied credit to the real economy regularly and played a vital role in the financial and economic stability of Pakistan.…”

“…Today the operations of Islamic financial institutions are not only confined to Muslim countries, but their increasing popularity and importance for market‐progression are realized in Europe and the United States as well (Abdul Rafay & Farid, 2017). When the world was engaged in battling the financial crisis, the Islamic financial sector demonstrated stability and sustained a landmark annual growth of 18% (Ernst and Young, 2016; Fakhfakh, 2015; Mensi et al, 2019). Such persistence performance in adverse global conditions encouraged investors to divert their capital to Shariah‐compliant investments (Ernst and Young, 2016).…”

Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

“…One function of an auditor is to ascertain whether the reports prepared by a manager comply with standard accounting principles [5,47]. An auditor's validation of financial facts increases the reliability of the report and lessens information risk, misrepresentative, and potentially benefiting both corporate owner and manager [57,51].…”

“…Resulting this categorisation, according to the corporates Law 22/1997, 2017 /article (195/b), the auditor must give his final opinion on a company's financial statements (balance sheet and profit and loss account) in one of the following ways: 1) absolute approval (unmodified/unqualified opinion) of the annual sheet, profit, and loss account and cash flow, 2) (unmodified/unqualified opinion), approval with reserve, 3) modified/qualified opinion) of the balance sheet, profit and loss account and cash flow, provided that he states the reasons for such a reservation and its financial effect on the company. and 4) Non-approval (adverse or disclaimer opinion) of the balance sheet, profit, and loss account and cash flows and returning them to the board of directors, with the reasons justifying such a rejection of the balance sheet [48,57].…”

Why does decomposed audit proposal readability differ by audit firm size? A Coh-Metrix approach

“…Linguistic studies provides several principles (i.e. clarity, conciseness, simplicity, consistency and coherence) that guide auditors to improve their written communication materials (Fakhfakh, 2015). Auditors can use writing techniques or text analyzers to avoid common writing flaws (long sentences, a disorder of ideas, excessive redundancy, lack of relevance and unnecessary use of jargon), and thus, to enhance the level of understanding of the information provided in audit proposals or audit reports.…”