A survey on awareness and the implementation of expanded audit report in Malaysia / Rani Diana Othman

The critical litigious environment which characterized today-s auditing environment due to recent economic crisis called for a more responsible financial reporting The existence of expectation gap has caused the role of auditors often being misunderstood by the users and audit report being perceived as useless. However, those who really understand the significance of the misconception would look forward for any efforts to reduce the gap. A study in United Kingdom in 1993 has investigated the effects of expanded audit report proposed by United States in 1988 and found that it was able to reduce the expectation gap and hence enhanced the understandability and usefulness of financial statements and audit report. Malaysian Institute of Accounting (MIA) has also a step to adopt the new standard of auditing in 1998. Therefore this study seeks to determine the awareness and the acceptance of expanded audit report by users and practitioners. After two years of adoption period , the expanded audit report does proved to give clearer understanding to Malaysian users on the auditors role and audit function. Although this study was able to prove the success in the implementation of the new standard by the companies, it does however show the lack of public awareness on expanded audit report existence. Since the main objective of expanded audit report is to bring society's expectation towards auditors into closer accord, more education effort should be done by the profession to ensure the reduction in criticism and disbelief which auditors face today. The success in achieving this objective should also be a basis for future economic globalization as well as better Malaysian's corporate governance.