Business Commons^™

Rhetoric In Financial Reporting: Evaluation Of Isa 720, Qingyuan Guo

Honors Theses

Prior research show that many investors rely on other information appearing alongside the audited financial statements in companies’ annual reports to make their economic decisions and falsely assume that the unaudited other information is also audited. Additionally, company management utilizes rhetorical strategies in other information to offer explanations and opinions conveying positive messages about the company value which audited financial data may not indicate. The expectation gap of investors on audit over other information and the concern of management manipulation incentivized the proposal of the Public Company Accounting Oversight Board (PCAOB) to establish a standard to extend auditors’ responsibility over …