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An experimental study of users' responses to qualified audit reports in China

Lin, Z. Jun, Tang, Qingliang and Xiao, Jason Zezhong 2003. An experimental study of users' responses to qualified audit reports in China. Journal of International Accounting, Auditing and Taxation 12 (1) , pp. 1-22. 10.1016/S1061-9518(03)00005-3

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Abstract

This paper presents the results of an experimental study on users’ responses to the qualification of audit reports in China. By employing the type of audit report (e.g., unqualified vs. qualified auditor opinion) as a manipulated variable in the experiment, we found mixed responses from the participants towards the perceived impact of a qualified audit report on users’ understanding and use of the financial statements. In general, Chinese users, credit and loan officers in particular, perceived a qualified auditor opinion as having a somewhat negative impact on the credibility of financial statements. However, no significant difference was found in users’ investment or credit decisions with respect to their exposure to the financial statements accompanied by an unqualified or a qualified auditor opinion. The study findings suggest that the U.S.-style qualified audit reports have fairly limited “information content” to users in the present Chinese auditing environment and that there is a need to further improve Chinese auditing standards and practices. In addition, the study provides some insights into recent auditing developments in China.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
J Political Science > JQ Political institutions Asia
Uncontrolled Keywords: Audit reports; Auditor opinions; Qualification of audit reports; Non-standard audit reports; Chinese auditing
Publisher: Elsevier
ISSN: 1061-9518
Last Modified: 04 Jun 2017 04:24
URI: http://orca.cf.ac.uk/id/eprint/38391

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