FREE-FORM REPORTING AND PERCEPTIONS OF THE AUDIT

This paper explores the ability of an audit report which is ‘free-form’ to change the reader's perception of the auditor, the auditee and the auditee's financial statements, as against a standard SAS 600 report. The paper reports the results of an experimental study using part-time MBA students as a surrogate for audit report readers. The ‘free-form’ report used in the experiment is based on a style of report already offered by a ‘big six’ firm to boards of directors on a private basis. It is found that the recognition and disposition of audit problems detailed in the free-form report generates a user perception of a more rigorous and useful audit.