Amer, T. S. and Drake, Phil (2002) The auditor's evaluation of other information accompanying financial statements: Qualitative expressions of magnitude describing corporate earnings: Working paper series--02-02. Working Paper. NAU W.A. Franke College of Business.
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Abstract
A significant portion of the annual reports issued by publicly traded firms contains non-numerical information (i.e., written expressions). AU Section 550 of the professional standards (AICPA, 2000) refers to this type of non-numerical information that accompanies the financial statements as (other information.) AU Section 550.04 clearly indicates that the auditor should read this other information and consider whether such information is materially inconsistent with information, or the manner of its presentation, appearing in the financial statements. This paper determines how the readers of the letter to shareholders that appears in the annual report numerically interpret the qualitative expressions of magnitude used by top management (e.g., how readers would numerically interpret the phrase “a significant increase in earnings”). The numerical interpretations of these qualitative expressions are then used to guide auditors in making the determination of when the use of a qualitative expression may be materially inconsistent with the information that appears in the accompanying financial statements.
| Item Type: | Monograph (Working Paper) |
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| Publisher’s Statement: | Copyright, where appropriate, is held by the author. |
| ID number or DOI: | 02-02 |
| Keywords: | Working paper, auditing, financial statements, annual reports |
| Subjects: | H Social Sciences > HG Finance |
| NAU Depositing Author Academic Status: | Faculty/Staff |
| Department/Unit: | The W.A. Franke College of Business |
| Date Deposited: | 26 Jan 2016 20:11 |
| URI: | http://openknowledge.nau.edu/id/eprint/1635 |
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