Analysis Of The Motivation And Decision-making Usefulness Of The Extra-long Audit Report

On January 15,2015,IAASB issued a revised audit report guidelines.The new International Audit Reporting Guidelines enrich the elements of the audit report and improve the content of the audit report.In order to promote the development of China's capital market and improve the information value of audit report,China's audit reporting standards reform follows the international footsteps.In December 2016,the Ministry of Finance issued 12 auditing standards for Chinese certified public accountants such as“Communication of Key Audit Matters in Audit Reports”.In 2018,China fully implemented the new audit reporting standards,which marked the further convergence of China and international audit reporting standards.In order to more accurately evaluate the information content and decision-making usefulness of the new audit report after the reform,this paper will be the subject of case study.On April 28,2018,Pricewaterhouse Coopers issued a 4 000-word audit report of disclaimer of opinion for Tianma Co..The length of the report is far above average.This paper attempts to study and analyze the motivation of the CPA to issue such an extra-long audit report,and evaluate usefulness of the decision-making of the extra-long audit report,and whether it means the longer the audit report,the more The value of the information,in turn,helps the report user to better understand the relationship between the length of the audit report and the usefulness of its decision-making,and provides reasonable advice on the preparation of the detailed audit report after the reform.This paper takes case analysis as the research method and selects the event that Pricewaterhouse Coopers issued an extra-long audit report for Tianma Co..First,it analyzes the background and content of China's audit report reform,and analyzes the content of Tianma Co.'s extra-long audit report.Secondly,the author cited the motivation of the extra-long audit report,On the one hand,auditors are affected by the audit standards and regulatory level and the level of the audited entity.It reduces the CPA's responsibility by disclosing the incremental information;on the other hand,it is influenced by the audit institution itself,the personal characteristics and experience of CPAs,also the impact of media reports,releasing more valuable information can attract the attention of the capital market,help report users to improve the usefulness of decision-making,and reflect the professionalism and prudence of auditors.Thirdly,through vertical and horizontal comparisons,this paper finds that,to a certain extent,the extra-long audit report under the background of the audit report standard reform has strong decision-making usefulness and can provide investors with incremental information,which helps It makes the right judgment.This report is also useful for decision-making users(including creditors,regulators,management,etc.).However,by comparing with the longest length of the audit report,the author found it does not mean that the longer the audit report is,the higher the value of its information.The information value of the audit report will be affected by many factors,such as the difference of the audit institution,whether the information disclosed has been made public,the importance of the information disclosed by the auditor,and the sensitivity of the investor to the specific disclosure.The conclusion of this paper is expected to help CPAs write more appropriate audit reports.First,to minimize the repeated disclosure of publicly available information,the CPA's excessive description of the public information has little value to investors;secondly,try to avoid the occurrence of empty words in the audit report;thirdly,disclose the major issues that the reporting users are really concerned about.