Analysing the fair value measurement audit process using interpretive structural modelling: an empirical study

Abstract

Last few decades have witnessed immense changes in global accounting standards all over the world and application of fair value measurement (FVM) is highly prominent among them. Indeed, whilst FVM inclusion enhances the informative significance of financial statements, it also instigates few complications i.e. reliability, measurement uncertainty and auditing challenges etc. (Doliya and Singh, 2015). This study focuses on FVM audit complexities and attempt to explore the key FVM audit factors while establishing the interrelationship among factors. To do this, we used exploratory factor analysis (EFA) to ascertain the factors of FVM audit process and interpretive structural modelling (ISM) for establishing the relationship among the factors. Practitioners and academicians can use the findings of this study to better understand the FVM audit process. Moreover, auditing firms may use the findings of this study to find the discrepancy in their FVM audit process and take corrective actions against it. In the end, implications, limitations and future research areas are discussed in detail.