The audit expectation gap
Auditing expectation gap or simply expectation gap is the term used to signify the difference in expectations of users of financial statements and auditor’s expectation concerning audited financial statements although its about expectations but still its scope and meanings have been defined in . Both scenarios will broaden the expectation gap an auditor must develop the requisite skills to detect fraud and obtain sufficient knowledge of the rules and regulations in order to better understand what is required during an audit. This paper presents the findings of an empirical study on the audit expectations gap concerning the role of the auditor in corporate fraud cases. The audit expectation gap is the difference in perception between auditors and users of audited financial statements concerning the nature of auditing unfortunately, there have been criticisms of the auditor by the public from which opinions have emerged over the years due to business failure.
The expectations gap is an issue for auditors as a greater “expectations gap” would lead to lower credibility, earning potential and prestige associated with their work 15 it is also an issue for the public and investors in. Another audit expectations gap relates to information about the audit (information gap) stakeholders and market participants may need or want more information about the audit and the results of the audit, the nature and extent of the audit procedures performed, and the quality of the audit. An evaluation of audit expectation gap: issues and challenges appah ebimobowei department of business education bayelsa s.
Since 1978, all auditors have been familiar with the expectations gap, but only in reference to the difference between how auditors see their responsibilities and the expectations of users of audit reports. Audit quality forum audit purpose working paper 1 expectation gaps the auditing expectation gap refers to the difference between what the public and. Audit expectation gap needs to be addressed from a number of perspectives in order to eliminate deficient performance by auditors, widen the scope to encompass reasonable expecta-. Bridging the expectations gap between auditors reportsand the aims of the audit reports and the expectation by the financial statements users of the audit process. The audit expectations gap can only be reduced if auditors can react to the business needs at a faster rate than before but with the strategies i have discussed .
The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectations from the public, the lower is the credibility, earning potential and prestige associated with the work of auditors. Other parts of the expectations gap are, however, in their power to close auditors complain that they are judged solely on the few audits that go wrong of the 93,000 done in britain alone each . Introduction the issue of “audit expectation gap (aeg)” has been very significant to the accounting profession since mid 1970s a. This document summarizes an april 2013 roundtable on the subject of the “expectation gap” this program brought together the key players in the financial reporting supply chain (corporate directors, financial executives, external auditors, and internal auditors) to discuss each group’s expectations of the roles of the various players in the deterrence and detection of financial reporting . Recent regulatory initiatives targeting the statutory audit regime support the notion that the audit expectation gap is still a driver of change this study seeks to analyse causes of the gap as well as the impact of proposed changes to the current statutory audit regime using an approach that .
The audit expectation gap
The studies on audit expectation gap bring out the nature of audit expectation gap prevailing in different countries of the world low (1980) examined the expectation gap in australia the anglo saxon world has experienced a spate of corporate failures such as financial scandals and audit failures. The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectations from the public, the lower is the credibility . The gap between the role of an auditor, as perceived by the auditor, and the expectations of the users of financial statements it may be subdivided into a gap in communications and a gap in performance the communications gap is caused by public expectations being unreasonable for example, users . There is concern that auditors and the public hold different beliefs about the auditors’ duties and responsibilities and the messages conveyed by audit reports in recent years, some spectacular and well‐publicised corporate collapses and the subsequent implication of the reporting auditors have highlighted the audit expectation gap.
- Liggio (1974) was the first to introduce the term “audit expectation gap” to audit literature he defines expectation gap as the difference between the levels of expected performance as perceived by both users of financial statement.
- The study sought to ascertain the role of the auditing profession in narrowing the audit expectation gap self-administered questionnaires were used in the study.
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The audit expectations gap is a prominent issue in the private sector however, in the public sector, the audit expectations gap is an emerging issue that has received little. The audit expectation gap is the difference between what the public and users of financial statements perceive the role of an audit to be, and what the audit profession claims is expected of them during the audit. [ 149] hian chye koh and e-sah woo the expectation gap in auditing managerial auditing journal 13/3  147–154 conduct of audit work (eg auditors’ ability to. The expectation gap in auditing audit expectation gap is the difference between the levels of expected performance as envisioned by the users of financial statements and by the independent .