Abstract
<p class="MsoNormal" style="text-align: justify; line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">We asked CPAs and financial statement readers if they believe distorted graphs influence judgments and if they think there is a need for standards governing their presentation and attestation in annual reports. We consider these important questions because decades of studies document that distorted graphs commonly appear in annual reports even though there is considerable evidence that such graphs influence readers&rsquo; judgments.<span style="mso-spacerun: yes;">&nbsp; </span>Our results show that professionals are aware of the potential influence of graphical distortion, believe that standards are needed to assist in preparing graphs of financial information to be included in annual reports, and agree that auditors should be required to provide assurance about the accuracy of such graphs. </span></span></p>
Highlights
C orporate annual reports often contain graphs of financial data
The problem is not confined to the United States; numerous studies document the existence of improperly designed graphs in annual reports in many other countries (Beattie and Jones 1992, 1997, 1999, 2000a, 2001; Courtis 1997; Frownfelter and Fulkerson 1998; Frownfelter-Lohrke and Fulkerson 2001; Mather et al 1996) and in IPO prospectuses
No explicit guidance is provided, to assist the auditor in determining whether such “other information” is or is not materially inconsistent with the financial statements, nor is any guidance given with respect to graphical design principles
Summary
C orporate annual reports often contain graphs of financial data. These displays are typically used to help readers quickly see trends and relationships in the data. Our results indicate that both financial statement readers and CPAs believe that improperly designed graphs of financial data are likely to influence viewer perceptions.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Journal of Business & Economics Research (JBER)
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
