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Full-Text Articles in Business
The Importance Of Clarification Of Auditors' Responsibilities Under The New Audit Reporting Standards*, Ann G. Backof, Kendall Bowlin, Brian M. Goodson
The Importance Of Clarification Of Auditors' Responsibilities Under The New Audit Reporting Standards*, Ann G. Backof, Kendall Bowlin, Brian M. Goodson
Faculty and Student Publications
Given the uncertainty regarding auditors' responsibilities, standard setters considered the need for clarification of technical terms such as reasonable assurance in the new audit reporting models. The PCAOB ultimately decided to exclude clarifying language from its final standard, while the Auditing Standards Board and IAASB made such language mandatory. Given the difference in reporting models, this study investigates the role clarification of reasonable assurance plays in auditor negligence. We predict and find that, absent clarification, jurors judge auditors to be more negligent when the audit report includes a related critical audit matters disclosure than when it does not. However, consistent …
Climate-Risk Materiality And Firm Risk, Ella Mae Matsumura, Rachna Prakash, Sandra C. Vera-Muñoz
Climate-Risk Materiality And Firm Risk, Ella Mae Matsumura, Rachna Prakash, Sandra C. Vera-Muñoz
Faculty and Student Publications
Managers are required to disclose material climate risk in Form 10-K, but their decision whether or not to disclose is confounded by the lack of consensus on whether climate risk is material to the firms, as well as uncertainty about enforcement of disclosure regulations. Using the SASB Materiality Map™ to proxy for market expectations of climate risk materiality, we test whether the association between disclosing climate risk in 10-Ks and firm risk (proxied by cost of equity (COE)) varies with market expectations of climate risk materiality. Using S&P 500 firms’ decisions whether to disclose climate risk in Form 10-K for …