 How understandable are SOX 404 auditors reports?J. Efrim Boritz, Louise Hayes and Lev M. Timoshenko International Journal of Accounting Information Systems, 2020, vol. 39, issue C Abstract: This study experimentally examines potential non-professional investors’ understanding of a random sample of SOX 404 reports containing both IT weaknesses (ITWs) and non-IT weaknesses (non-ITWs) as reflected in their internal control weakness (ICW) severity ratings and their accuracy in identifying the reported ICWs. We find that the number of perceived non-ITWs and report length are positively associated with potential investors’ ICW severity ratings and that failing to perceive non-ITWs reduces potential investors’ ratings of weakness severity. However, the number of perceived ITWs is not associated with potential non-professional investors’ ratings of the overall severity of ICWs. Potential investors’ errors in identifying both non-ITWs and ITWs are associated with the number of non-ITWs and ITWs reported. Also, errors are positively associated with lower readability of SOX 404 reports. We identify specific types of ITWs and non-ITWs that contribute the most to the total number of errors made by non-professional investors in perceiving ICWs. Keywords: SOX 404 reports; Readability; Understandability; Internal control weaknesses (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ijoais:v:39:y:2020:i:c:s1467089520300543 DOI: 10.1016/j.accinf.2020.100486 Access Statistics for this article International Journal of Accounting Information Systems is currently edited by S.V. Grabski More articles in International Journal of Accounting Information Systems from Elsevier |
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