TY - JOUR
T1 - An experimental study of users' responses to qualified audit reports in China
AU - LIN, Zhijun
AU - Tang, Qingliang
AU - Xiao, Jason
N1 - Funding Information:
The authors are grateful to two anonymous reviewers and the Editor for their helpful suggestions and editorial assistance. Comments on earlier drafts of this paper from professors Barry Cooper, Benjamin Tai, and the participants of the 13th Asian-Pacific Conference on International Accounting Issues held at Rio de Janeiro, Brazil on October 28–31, 2001 are appreciated. Financial support from the Faculty Research Grants at Hong Kong Baptist University is acknowledged.
PY - 2003
Y1 - 2003
N2 - 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.
AB - 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.
KW - Audit reports
KW - Auditor opinions
KW - Chinese auditing
KW - Non-standard audit reports
KW - Qualification of audit reports
UR - http://www.scopus.com/inward/record.url?scp=0037218319&partnerID=8YFLogxK
U2 - 10.1016/S1061-9518(03)00005-3
DO - 10.1016/S1061-9518(03)00005-3
M3 - Journal article
AN - SCOPUS:0037218319
SN - 1061-9518
VL - 12
SP - 1
EP - 22
JO - Journal of International Accounting, Auditing and Taxation
JF - Journal of International Accounting, Auditing and Taxation
IS - 1
ER -