What's wrong with the current audit risk model?

Accounting Perspectives

Volumn 6, Issue 4, 2007, Pages 343-367

  Smieliauskas, Wally ^a  

^a UNIVERSITY OF TORONTO   (Canada)

Author keywords

Accounting risk; Audit risk; Conceptual framework of financial reporting; Risk model

Indexed keywords

EID: 37649001338     PISSN: 1911382X     EISSN: 19113838     Source Type: Journal    
DOI: 10.1506/ap.6.4.1     Document Type: Review

References (49)

1. American Institute of Certified Public Accountants (AICPA). 2005. Codification of Statements on Auditing Standards AU 100-900. New York: AICPA.
2. American Institute of Certified Public Accountants (AICPA). 2006. Official releases: SAS nos. 104-111. Journal of Accountancy 201 (5): 112-53.
3. Alexander, D., and S. Archer. 2003. On economic reality, representational faithfulness and the "true and fair override". Accounting and Business Research 33 (1): 3-17.
4. Allen, R. D., D. R. Hermanson, T. M. Kozloski, and R. J. Ramsey. 2006. Auditor risk assessment: Insights from the academic literature. Accounting Horizons 21 (2): 157-78.
5. American Assembly. 2003. Report on the future of the accounting profession. http://www.americanassembly.org.
6. Barth, M. E. 2006. Including estimates of the future in today's financial statements. Accounting Horizons 20 (3): 271-285.
7. Beechy, T. H. 2005. Accounting standards: Rules, principles, or wild guesses? Canadian Accounting Perspectives 4 (2): 195-212.
8. Benston, G. J. 2006. Fair-value accounting: A cautionary tale from Enron. Journal of Accounting and Public Policy 25 (4): 465-84.
9. Boritz, J. E. 1991. Going. Going. Gone! CA Magazine 124 (4): 22-9.
10. Bullen, H. G., and K. Crook. 2005. Revisiting the concepts: A new conceptual framework project. Norwalk, CT/London: Financial Accounting Standards Board (FASB)/International Accounting Standards Board, http://www.fasb.org/project/communications_paper.pdf.
11. Canadian Institute of Chartered Accountants (CICA). 2007. CICA handbook. Toronto: CICA.
12. Cormier, D., and M. L. Magnan. 2005. From accounting to "forecounting". Canadian Accounting Perspectives 4 (2): 243-56.
13. Cockburn, D. 1992. At home on the range. CA Magazine 125 (5): 38-9.
14. Cohen, M. F. 1978. Commission on Auditors' Responsibilities: Reports, conclusions, and recommendations. New York: Commission on Auditors' Responsibilities.
15. Cushing, B. E., and J. K. Loebbecke. 1983. Analytical approaches to audit risk: A survey and analysis. Auditing: A Journal of Practice & Theory 3 (1): 23-41.
16. Cvitanic, J., and I. Karatzas. 1999a. Generalized Neyman-Pearson lemma via convex duality. Preprint, Columbia University, http://www.math.columbia.edu/ ~ik/neypea.pdf.
17. Cvitanic, J., and I. Karatzas. 1999b. On dynamic measures of risk. Finance and Stochastics 3: 451-82. http://www.math.columbia.edu/~ik/ CvitKar_99.pdf.
18. Financial Accounting Standards Board (FASB). 2005. Joint FASB/IASB conceptual framework project. Invitation to comment: Selected issues relating to assets and liabilities with uncertainties. No. 1235-001, September 30. Norwalk, CT: FASB. http://www.fasb.org/draft/.
19. Fogarty, J. A., L. Graham, and D. R. Schubert. 2007. Assessing and responding to risks in a financial statement audit: Part II. Journal of Accountancy 202 (1): 59-64.
20. Glover, J. C., Y. Ijiri, C. B. Levine, and P. J. Liang. 2005. Separating facts from forecasts in financial statements. Accounting Horizons 19 (4): 267-82.
21. Gronewold, U. 2006. The probative value of audit evidence. European Accounting Association Congress, Dublin. March 23-24.
22. Henry, D. 2004. Fuzzy numbers. BusinessWeek Online, October 4. http://www.businessweek.com.
23. Henry, D., M. France, and L. Lavelle. 2005. The boss on the sidelines. BusinessWeek, April 25, 86-96. http://www.businessweek.com.
24. Hitzig, N. B. 2004. Statistical sampling revisited. CPA Journal 74 (5): 30-5.
25. International Federation of Accountants (IFAC). 2002. Proposed amendment to ISA 200, "Objectives and Principles Governing an Audit of Financial Statements." New York: IFAC. http://www.ifac.org/Members/Source-Files/ Exposure-Drafts/ED-Audit_Risk.Oct021.pdf.
26. International Standards on Auditing (ISA). 2006. IFAC handbook, ethics and international standards on auditing. New York: International Federation of Accountants.
27. Johnson, L. T. 1994. Future events: A conceptual study of their significance for recognition and measurement. Norwalk, CT: Financial Accounting Standards Board.
28. Kinney, W. R., Jr. 1989. Achieved audit risk and audit outcome space. Auditing: A Journal of Practice & Theory 8 (Supplement): 67-84.
29. Knapp, M. C. 2006. Contemporary auditing, 6th ed. Belmont, CA: Thomson/South-Western.
30. Knechel, W. R. 2007. The business risk audit: Origins, obstacles and opportunities. Accounting, Organizations and Society 32: 383-408.
31. Loebbecke, J. K. 1995. On the use of Bayesian statistics in the audit process. Auditing: A Journal of Practice & Theory 14 (2): 188-92.
32. Maines, L. A., and J. M. Wahlen. 2006. The nature of accounting information reliability: Inferences from archival and experimental research. Accounting Horizons 20 (4): 399-425.
33. Mautz, R. K., and H. A. Sharaf. 1961. The philosophy of auditing. Sarasota, FL: American Accounting Association.
34. Merton, R. 2002. Think of a number. The Economist, May 16.
35. Peecher, M. E., R. Schwartz, and I. Solomon. 2007. It's all about audit quality: Perspectives in strategic-systems auditing. Accounting, Organizations and Society 32: 463-85.
36. Petroni, K., and M. Beasley. 1996. Errors in accounting estimates and their relation to audit firm type. Journal of Accounting Research 34 (1): 151-71.
37. Public Company Accounting Oversight Board (PCAOB). 2005. Reasonable assurance. Background paper, Standards Advisory Group meeting, October 5-6. http://www.pcaobus.org/News_and_Events/Events/2005/10-05-06.aspx.
38. Public Company Accounting Oversight Board (PCAOB). 2006. Review of risk assessment standards - The auditor's consideration of materiality in audit planning and evaluation of likely misstatements. Background paper, Standing Advisory Group meeting, February 9. http://www.pcaobus.org.
39. Securities and Exchange Commission (SEC). 2003. Study pursuant to section 108(d) of the Sarbanes-Oxley Act of 2002 on the adoption by the United States financial reporting system of a principles-based accounting system. July 25. http://www.sec.gov.
40. Savage, S. 2003. Some gratuitous inflammatory remarks on the accounting industry. Journal of Forensic Accounting 4(2): 351-4.
41. Savage, S., and M. Van Allen. 2002. Accounting for uncertainty. Journal of Portfolio Management 29(1): 31-9.
42. Schipper, K. 2007. Required disclosures in financial reports. The Accounting Review 82 (2): 301-26.
43. Shankar, P. G., and H. Tan. 2006. Determinants of audit preparers' workpaper justifications. The Accounting Review 81 (2): 473-95.
44. Skinner, R. 1995. Judgment in jeopardy. CA Magazine (November): 14-21;
45. reprinted in Canadian Accounting Perspectives (2005) in the special forum on the legacy of Ross Skinner, 4 (2): 143-52.
46. Smieliauskas, W., and K. C. K. Lam. 2004. The quality of financial reporting and its relationship to audit quality via an expanded risk model. Journal of Forensic Accounting 5(2): 273-310.
47. Srivastava, R. P., and G. R. Shafer. 1992. Belief-function formulas for audit risk. The Accounting Review 67 (2): 249-83.
48. Walton, D. 2006. Fundamentals of critical argumentation. Cambridge: Cambridge University Press.
49. Zeff, S. A. 2007. The primacy of "present fairly" in the auditor's report. Accounting Perspectives 6(1): 1-20.