Quality of Audit Reports in Light of the Revised Reporting Requirements (ISA 706)

Abstract

This study examines the impact of applying International Standard on Auditing (ISA 706), which requires the inclusion of Emphasis of Matter and Other Matter paragraphs without changing the auditor’s opinion, on external audit report quality. The study aims to determine whether ISA 706 effectively enhances users’ understanding of significant financial matters. A descriptive-analytical approach was used, collecting data through a structured questionnaire distributed to banking sector employees. The responses were analyzed using SPSS to assess statistical relationships and significance. The findings indicate that proper application of ISA 706 positively improves the clarity of audit reports, enhances financial transparency, and increases users’ confidence in audit outcomes. However, the results show no significant overall effect on audit report quality as a single construct. The study recommends strengthening professional training for auditors and improving regulatory oversight to ensure effective implementation of ISA 706 and support better audit reporting practices across the entire banking sector.