Financial Auditing and Reporting: Applied Business Research Report

This report provides a comprehensive analysis of financial auditing, examining key changes in audit reports and their impact on organizational development. It reviews four articles, highlighting common and different themes, such as the evolution of auditing standards, the importance of audit quality, and the influence of critical audit matters on investor decisions. The report discusses the managerial implications of these findings, emphasizing the need for clear and transparent financial reporting to improve investor confidence and facilitate sound financial decisions. Additionally, it addresses the limitations of the reviewed articles, such as the lack of specificity to individual organizations, and suggests directions for future research, including more practical applications of auditing standards and a deeper exploration of the factors influencing audit quality. The report concludes by emphasizing the significance of financial auditing in promoting organizational development and achieving business objectives.

Running head: APPLIED BUSINESS RESEARCH
Applied business research
Name of the student
Name of the university
Author note
Word count: 1524

1Running head: APPLIED BUSINESS RESEARCH
Table of contents
Summary of the theory and progression in the field..................................................................3
Common themes/findings across the four articles.....................................................................3
Different themes/findings across the four articles.....................................................................4
The managerial implication of the four articles.........................................................................4
Study limitations and future research direction proposed in the four articles............................5
Reference list..............................................................................................................................6

2Running head: APPLIED BUSINESS RESEARCH
Summary of the theory and progression in the field
Auditing is very important in the case of analysing the financial risk of an
organization. This can be sad that auditing system is a crucial system for preventing the
financial errors and identifying the misstatements in the organisation's report and record. In
this study, four articles have been reviewed for analysing the key changes in an audit report,
which are required for organizational development. In an article named ‘Enhanced auditor's
reporting,' it has been identified that auditing standard has changed. It has been mentioned in
this article that by following the assurance standards Board, the organizations will be able to
apply this in the workplace (Ernest and Young 2016). As its result, the audit will be more
informative and transparent in order to deal with the issues.
The second article which has been reviewed in this study has mentioned about
revising the existing assurance board proposals in the organization (Auditing and Assurance
Standards Board 2015). Enhancement is auditing report a critical process, in which depending
on the existing financial crisis and risk, the future reports are being released. The
enhancement report not only being introduced for introducing the financial report but also it
is being introduced for analysing the quality of financial reporting in an organization.
Depending on the judgement of the auditor, the person the significance of those financial
statements audits to the higher authority. In this situation, this can be said that depending on
the characteristics of auditors the audit report may vary. In this article, the standards which
have been mentioned are ASAs 220, 210, 510, 230, 580, 710 and 600 (Auditing and
Assurance Standards Board 2015).
In the third article named ‘Understanding Audit quality: Insights from Audit
Professionals and Investors' it has been identified that in an audit firm, measures and
evaluation of audit quality are the important agendas of the auditing standards setters. In this
study, the quality of audit in PCAOB has been highlighted. It has been identified in this study
that the audit quality influences the input process of an organization. It has also been
mentioned in this study that quality of the auditor is very important in the case of analysing
the auditing quality. Different audit quality indicators have been identified in this study, by
The Public Company Accounting Oversight Board (Christensen et al. 2016). This has also
been mentioned in this study that these qualities have the higher level of impacts on the
internal and external management of the company.
The fourth article named ‘Do Critical Audit Matter Paragraphs in the Audit Report
Change Nonprofessional Investors' Decision to Invest?’ the author has tried to shed light on
the changes in the standard audit report, which has been recently changed. It has been
mentioned in this study that both the international and US standard setters have brought these
changes in the case of critical audit matter and recruitment. In this study, it has been shown
the reaction of nonprofessional investors towards the audit report. Depending on the audit
reports, the investors have decided to bring the changes in their financial decisions
(Christensen, Glover and Wolfe 2014). In this article, the author has also tried to highlight the
importance of critical audit matter. This has been identified that through this process, the
benefits of the financial statements are being clarified to the investors. On the other hand, this
has also been mentioned in this article that Critical audit matters impact on the financial users
in an organization.
Common themes/findings across the four articles
After analysing the four articles, this has been identified that in the current business scenario,
it has very important for the organizations to develop proper financial management in an

3Running head: APPLIED BUSINESS RESEARCH
organization. On the other hand, it has also been identified that through auditing the present
fair financial view of an organization is being analysed. Therefore, from all the articles it has
been identified that audit report is very important in the case of analysing the future financial
risk of a company. From the first two articles it has been identified that for bringing the
auditing standard, different auditing standards have been introduced, which can play an
important role in the case of developing the informative and transparent report in the
organization. In the first article it financial auditing has done depending on the Assurance
Standards Board. In the second articles, new standards have been introduced, which can play
an important role in the case of bringing organizational transparency.
In the case of third and fourth articles, it has been identified that quality of the audit is
very important in the case of influencing the decision of the investors in the organization. It
has also been identified in this study that the quality of audit highly influences the external
and internal reports of the company. Depending on the quality of auditing, sometimes the
investors change their decision regarding financial budgeting. On the other hand, in the fourth
article, the Critical Audit has been highlighted. In this article, the author has also discussed
that how the auditing process influences the nonprofessional investors in the company.
Therefore, this can be said that both of the articles have discussed the significance of
financial auditing in the case of bringing the future financial changes and investments in the
organization.
Different themes/findings across the four articles
The major difference between the first and second article is the first article has developed
depending on the existing financial standards. On this article, the author has discussed the
modification of articles in the organization. On the other hand, in the case of the second
article, the author has developed the financial auditing strategy depending on the reversed
standards. The major differences between the third and fourth articles are, in the third article
the quality of auditing has been highlighted. Here the quality of audit has been highlighted as
the important part of financial reporting. On the other hand, the fourth article mainly focuses
on the investors and influencing factors, which impacts on their financial decision making
process.
The managerial implication of the four articles
In the above four articles, it has been mentioned that financial auditing has a higher
level of impact on the business environment. In the first article, the changes which have been
already proposed in the business industry have been mentioned. It has also been analysed by
the author if the existing organizations will be able to introduce the Assurance Standards
Board, it will be helping the organizations to make the audit process more clear. This has also
been analysed that by maintaining the proper standards, the audit result can be made more
informative and transparent. Therefore, this can be said that it will be helping the
organizations to get the fair financial report. In the second article, the author has highlighted
various standards, which can be helpful for the organizations, in order to bring the advanced
audit method in the workplace. Through the process, the organization will be able to manage
financial auditing process more efficient for analysing the future risk. From the third article,
the quality of audit has been analysed. It has shown that how the importance of audit quality
influences the business environment. In this article, this has also been mentioned that
depending on the individuals' judgements the audit report can be changed. After analysing the
entire article, this can be said that if the quality of the audit is being maintained in the
organization, it will be able to provide the fair financial report of the organization, depending
on which the financial budgeting process can be improved. The fourth article is very

4Running head: APPLIED BUSINESS RESEARCH
important in the case of analysing the Critical Audit Matter; this can be said that this will be
playing an important role in an organization in order to convince the investors' financial
decisions. Depending on the appropriate audit process, the internal financial condition of an
organization can be analysed. Therefore this can be said that if the organizations focus on
developing proper financial statement, this will be helping in the case of bringing
organizational development.
Study limitations and future research direction proposed in the four articles.
In this study, the major limitations, which have been analysed are all the articles have
discussed the issues depending on the global industry. Although these matters are very
important in the organization, if the financial situation of every organization is being
analysed, it will be identified that the financial report of the organizations can vary. Therefore
this can be said that these practices cannot be applied to every organization. Therefore if the
articles would be specified, it will be helping for the organisations to understand of these can
be applied for their workplace or not. Although different financial standards have been
mentioned in the second article. But the process of application needs to be more clear. Of the
third article would be discussed the influential elements to increase the audit quality, it would
be more helpful for other organizations. However, the articles have several limitations, but
this cannot be denied that the articles have shown the way of financial auditing improvement
in the business organizations. By following these, the organizations will be able to achieve its
goals and objectives.

5Running head: APPLIED BUSINESS RESEARCH
Reference list
Auditing and Assurance Standards Board 2015 AUASB invites comments on Exposure Draft
01/15 – enhancements to auditor reporting
Christensen, B.E., Glover, S.M. and Wolfe, C.J., 2014. Do critical audit matter paragraphs in
the audit report change nonprofessional investors' decision to invest?. Auditing: A Journal of
Practice & Theory, 33(4), pp.71-93
Christensen, B.E., Glover, S.M., Omer, T.C. and Shelley, M.K., 2016. Understanding audit
quality: Insights from audit professionals and investors. Contemporary Accounting
Research, 33(4), pp.1648-1684.
Ernest and Young 2016 Enhanced auditor’s reporting Assurance – Special edition