The Impact of Compliance with International Standard on Auditing (265) on the External Auditor Report

Abstract

 This study aimed to investigate the impact of compliance with International Standard on Auditing (ISA) 265 on the external auditor's report, taking into account management's response to the auditor's reports regarding deficiencies in internal controls. The study employed a descriptive and analytical approach. The study population consisted of all Jordanian certified public accountants, totaling 521 auditors. The study sample comprised 202 auditors. Descriptive analysis methods were used to characterize the study variables, and the path coefficient test was used to test the hypotheses. The study concluded that the auditor's compliance with ISA 265 has an impact on the auditor's report, and that management's response to the auditor's reports regarding deficiencies in internal controls also has an impact on the report. There is also a high level of commitment from auditors to apply the standard, and a high level of responsiveness from management and the governance team to auditor reports regarding internal control deficiencies. The auditor's report includes all substantive issues and remedies related to internal control deficiencies and the nature of the management and governance team's response. The study recommends holding meetings between auditors, management, and governance officials to discuss the nature of internal control deficiencies that the auditor may discover as they arise. It also recommends that these departments continuously review their internal control systems to ensure the quality and effectiveness of internal controls, which will reduce the likelihood of encountering internal control deficiencies.