Communicating Assurance Using Practitioner-Customized Procedures: An Experiment and Emerging Research Opportunities

What is it about?

Traditionally, financial and nonfinancial information assurance standards have specified either "high" assurance based on "sufficient evidence" or "moderate" assurance based on analytical procedures and inquiries. Recently, in response to rapidly growing nonfinancial assurance demand, the IAASB extended the possible range of limited assurance by allowing practitioner-customized procedure descriptions and assuming diverse users can "appreciate" the varying reliability achieved. Experimentally, we examine GHG emissions assurance report users' confidence judgments using combinations of assurance report attributes deemed important by the IAASB: critical practitioner-customized procedure descriptions, conclusion frame, and engagement label. We find that, consistent with an "assurance communication gap," including or explicitly excluding a practitioner-customized procedure deemed essential-for-reasonable assurance does not significantly affect users' confidence judgments. However, we find that both positive conclusion frames and reasonable assurance engagement labels incrementally enhance confidence judgments. Our results suggest effects of customized procedure information are small compared to effects of conclusion frame and engagement label.

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