Abstract

This study suggests the improvement of the external audit implementation details and analyses them being attached to the auditor’s report according to the revised external audit law of Korea in 2014. We find 23% of sample firms’ audit hours on the external audit implementation details are different from those on the annual reports. It is necessary to confirm the audit hours on the annual report before it is issued in order to keep the reliability of audit hour data. And the external audit implementation details attached to the separate financial statements audit reports are the same as those attached to the consolidated financial statements audit reports. It may lead the financial statements users to misunderstand that the audit hours of the separate financial statements are the same as those of the consolidated financial statements. So it is necessary to disclose separately the audit hours of the consolidated financial statements in order to improve the usefulness of the external audit implementation details. Finally, we find the significantly negative correlation between review hours and the discretionary accruals. This result means the more time auditors spend for the interim financial statement review, the more efficiently year－end audit could be implemented. In addition to that we suggest the number of audit participants should not be included double and the total audit hours should include the time for preparing for audit report with foreign language on the external audit implementation details.

Keywords

• external audit implementation details
• audit hours
• discretionary accruals

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