Evaluating Combined Assurance as a New Credibility Enhancement Technique

Zhou, S, Simnett, Roger and Hoang, H 2019, Evaluating Combined Assurance as a New Credibility Enhancement Technique, Auditing: a Journal of Practice and Theory, vol. 38, no. 2, pp. 235-259, doi: 10.2308/ajpt-52175.

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Title Evaluating Combined Assurance as a New Credibility Enhancement Technique
Author(s) Zhou, S
Simnett, Roger
Hoang, H
Journal name Auditing: a Journal of Practice and Theory
Volume number 38
Issue number 2
Start page 235
End page 259
Total pages 25
Publisher American Accounting Association
Place of publication Sarasota, Flo.
Publication date 2019
ISSN 0278-0380
1558-7991
Keyword(s) Social Sciences
Business, Finance
Business & Economics
integrated reporting
assurance
combined assurance
analyst forecasts
bid-ask spreads
information asymmetry
VOLUNTARY NONFINANCIAL DISCLOSURE
ECONOMIC CONSEQUENCES
AUDIT QUALITY
INTERNATIONAL EVIDENCE
SUSTAINABILITY REPORTS
FORECAST ACCURACY
CAPITAL-MARKET
ANALYST
MANAGEMENT
COST
Summary SUMMARY One of the challenges associated with emerging forms of external reporting is finding efficient and effective means to enhance the credibility of these reports (IAASB 2016). This study examines a novel credibility-enhancing mechanism, combined assurance (CA), where the credibility-enhancing processes of the internal auditor, the external auditor, and the effectiveness of risk management and internal controls and processes are publicly reported by the company (audit committee). We identify the most appropriate setting currently available (Integrated Reporting in South Africa) to examine whether there are benefits associated with communicating the details of CA within companies' integrated reports. We find that communicating the details of CA is beneficial in reducing both analysts' forecast errors and dispersion, and also in reducing the bid–ask spread for companies where the information environment is weaker. The implications of these findings for regulators, standard-setters, assurance providers, and users of extended external reports are discussed.
Language eng
DOI 10.2308/ajpt-52175
Indigenous content off
Field of Research 1501 Accounting, Auditing and Accountability
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Persistent URL http://hdl.handle.net/10536/DRO/DU:30150647

Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
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