Assessing the Relationship Between Audit Standards Compliance and Financial Reporting Accuracy

Posted: Sep 11, 2023

• Damien Bell
• Alana Walsh
• Penelope Hughes

Abstract

The relationship between audit standards compliance and financial reporting accuracy represents a fundamental assumption in accounting regulation and practice. Conventional wisdom suggests that strict adherence to established audit standards inherently leads to more accurate financial reporting. However, this presumed linear relationship remains empirically underexplored through sophisticated analytical frameworks. This research addresses this gap by developing and applying a novel methodological approach that transcends traditional compliance measurement techniques. The study challenges the simplistic compliance-accuracy paradigm by examining the nuanced interactions between various compliance dimensions and their collective impact on reporting outcomes through a multidimensional compliance assessment framework, computational linguistics techniques, network analysis, and identification of contextual moderators.