New Audit Reports Boost Transparency, Improve Accounting Quality for Businesses
The study examined how the introduction of new audit reports in 2017 affected audit quality. The new reports provide more information about the audit process, increasing the value of audit reports and the reliability of external audits. Using measures like audit fees, audit hours, and discretionary accruals, the study found that the introduction of new audit reports led to higher audit fees and hours, and lower discretionary accruals. Specifically, the inclusion of key audit matters in the new reports resulted in increased audit fees and hours, and decreased discretionary accruals. Overall, the study suggests that the introduction of new audit reports and the inclusion of key audit matters have improved audit quality.