A Study of Uncertainty Expressions in Australian Accounting and Auditing Standards

This study is an empirical examination of Australian auditors' interpretation of selected key uncertainty expressions such as virtual certainty, expected, reasonable assurance and possible, contained in Australian accounting and auditing standards. The results showed three major findings. First...

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Bibliographic Details
Published in:Pacific accounting review 2003-02, Vol.15 (2), p.1-28
Main Authors: Psaros, Jim, Patel, Chris, Warnakulasuriya, Sriyani
Format: Article
Language:English
Subjects:
Accounting firms
Accounting interpretations
Accounting standards
Auditing interpretations
Auditing standards
Auditors
Culture
Financial accounting standards
Hypotheses
International accounting standards
Principles
Statistical analysis
Studies
Uncertainty
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Summary:This study is an empirical examination of Australian auditors' interpretation of selected key uncertainty expressions such as virtual certainty, expected, reasonable assurance and possible, contained in Australian accounting and auditing standards. The results showed three major findings. First, auditors demonstrated a reasonably high degree of variability in the interpretation of uncertainty expressions. In view of the proliferation of uncertainty expressions within international and Australian accounting and auditing standards, this lack of consistency in interpretation of uncertainty expressions raises some serious concerns. Second, compared with the less experienced auditors, the more experienced auditors demonstrated greater variability in their interpretations of uncertainty expressions. Third, contrary to expectations, this study did not find any difference in judgements between auditors in big-five and non-big-five firms. In aggregate, the findings of the study have implications for standard setting.
ISSN:0114-0582
2041-5494
DOI:10.1108/eb037972