University of California, Riverside

Undergraduate Business Program

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The Distinguished Professor of Audit and Assurance provides his expertise on possible changes to the current auditor's reporting model.

(April 22, 2011)

Citing possible communication gaps in the way auditors currently present reports to investors, the Public Company Accounting Oversight Board (PCAOB), a nonprofit corporation established by Congress through the Sarbanes-Oxley Act and which oversees auditing standards for US public companies, is looking at how to improve the auditor’s reporting model. As part of its outreach, the PCAOB enlisted the expertise of UCR School of Business Administration Distinguished Professor of Audit & Assurance Ted Mock, based on research he has conducted with the backing of AICPA (American Institute of Certified Public Accountants) and IAASB (International Auditing and Assurance Standards Board).

In a panel discussion at the 2011 PCAOB Academic Conference on April 15, Mock presented findings on user perceptions of unqualified auditor’s reports from his current research on the “Communicative value of and ‘rebalancing’ of the standard auditor’s report” (co-authored with Jerry L. Turner, Glen L. Gray, and Paul J. Coram). Feedback from focus groups comprised of stakeholders and a verbal protocol study conducted with financial analysts indicated that auditor’s reports are elusive, open to misinterpretation, and to some users of little value. Some recommendations stakeholders offered for improving the current reporting model include the disclosure of materiality and inclusion of a synopsis, among others. Mock also presented additional ideas from his work published in Current Issues in Auditing, such as the inclusion in auditor’s reports of extra information on the audited business’s sustainability.

Taking into account Mock’s research findings, as well as the recommendations of other auditing and assurance professionals, the PCAOB has an early summer target date for its proposal of improvements to the current auditor’s reporting model.

As an academic researcher, Mock said, “For ninety-nine percent of a business researcher’s work, it’s hard to trace a line to the work’s impact. So it’s great that our research is having impact within the auditing profession.”

News Contact:
Mark Manalang
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