No abstract

SAS58, one of the Expectation Gap auditing standards, changed the wording of the standard unqualified auditors report. The changes mandated by SAS58 do not reflect changes in the underlying auditing process or in the auditors responsibility for the audited financial statements. An experiment was conducted to determine whether these changes in the auditors report would affect jurors assessments of liability in an audit failure suit. No difference was found between liability assessments based on old and new forms of the report, suggesting that the changes mandated by SAS58 have no decision usefulness to report users.

Although the Chapter 11 filing has occasionally been viewed as a potentially useful management tool, its associated costs are tremendous. Chapter 11 proceedings absorb an enormous portion of managements time. Many formerly routine decisions must now be evaluated by outsiders, who are given legal power to accomplish their own goals. The delays in the decision-making process reduce managements effectiveness.