SAS 58, Audit Firm Size, And The Incidence Of Uncertainties In Audit Reports: An Empirical Study

Abstract

This study develops and investigates two hypotheses: (1) that adoption of SAS 58 should be associated with an increase in the incidence of uncertainties referenced in the audit reports of small audit firms and (2) that there should be no change in the incidence of uncertainties referenced by large audit firms. The empirical results support both hypotheses. The main implication is that standard-setting bodies need to begin giving consideration to the possibility of size-related differences in the effects of changes in auditing standards.