Assessing the impact of the new auditor’s report

Hong Li, David Hay*, David Lau

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

36 Citations (Scopus)


Purpose: Changes to the auditor’s report have been proposed and issued internationally to provide more relevant information to users and enhance the perceived value of financial statement audits. This paper aims to investigate the impact of audit reporting changes on audit quality and audit fees in the New Zealand context. Design/methodology/approach: The authors examined audit quality measured by absolute abnormal accruals and audit fees for New Zealand listed companies. Findings: The evidence suggests the enhanced audit reports were followed by an improvement in audit quality as proxied by a reduction in absolute abnormal accruals upon the adoption of the new audit reporting requirements. There was also a significant increase in audit fees. Practical implications: Although the new auditor reporting requirements are associated with improvements in audit quality, such benefit does not come without cost. Originality/value: The study provides evidence about the impact of this recent substantial reform to auditing.

Original languageEnglish
Pages (from-to)110-132
Number of pages23
JournalPacific Accounting Review
Issue number1
Publication statusPublished - 2019 Mar 18


  • Audit report
  • Auditing
  • Enhanced audit report
  • Key audit matters
  • Partner signature

ASJC Scopus subject areas

  • Accounting
  • Finance


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