Expectation gap, performance gap, reasonableness gap, auditing integration. Internal audit can have a broad scope in an organization that extends beyond financial reporting. The accountants waterloo 1974 journal of contemporary business volume 3 no 3 at p 27. Food and drug administrations guide to minimize microbial food safety hazards for fresh fruits and vegetables pdf and industry recognized food safety practices. Analysis of audit expectation gap between users of audit.
An empirical study of the audit expectationperformance gap. The auditing expectation gap refers to the difference between 1 what the public and other financial statement users perceive auditors responsibilities to be and 2 what auditors believe their responsibilities entail. Auditors and investors perceptions of the expectation gap. 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. The population of this survey includes two groups of official auditing officials and management of some privately held firms. An assessment of audit expectation gap in ghana albert agyei1 baah kusi aye2 ebenezer owusuyeboah3 1,2,3valley view university, school of business oyibi accram, 1email. Martens is an associ ate professor, both at depaul university. But the scope, dimensions, and significance of this gap could receive more explicit attention in public policy debates and analyses. Defined as the gap between societys expectations of auditors and auditors perceived performance, it is seen to comprise reasonableness and performance components, the latter being subdivided into. Expectations gap in auditing of late, there has arisen a concern that public and auditors have different beliefs about duties, responsibilities and messages conveyed by audit reports. May 28, 20 auditing expectation gap or simply expectation gap is the term used to signify the difference in expectations of users of financial statements and auditors expectation concerning audited financial statements. Firstly, it examines whether an expectation gap exists in malaysia among the auditors, auditees and audit beneficiaries in relation to the auditors duties.
Sharaf, auditing was seen by many at the time as less of a professional activity and more of a completely practical series of practices and procedures, methods, and techniques howard levy, unsolved problems in auditing. Humphrey and turley 1992 further trace the audit expectation gap to the 19th century with the commencement of company auditing. The impact of audit education on the audit expectation gap. Monroe and woodliff 1993 defined the audit expectation gap as the difference in beliefs between auditors and the public about the duties and responsibilities. To date, only a limited number of studies on the audit expectations gap in the public sector are available, either in the context of a financial. The gap is defined as the difference between societys expectations of auditors and perceived performance of auditors porter, 1993. However, acca defines the expectation gap in audit as the difference between what the general public thinks auditors do and what the general public would like auditors to do. The profession has long spoken about the expectation gap in audit, and.
Closing the expectation gap in deterring and detecting. Our conclusion is that there is an expectation gap between the business administration students in kristianstad university and the auditing profession. The phrase audit expectations gap was first introduced into the literature over twenty years ago by liggio 1974. The study examined the level and nature of expectation gap performance. Pdf deconstructing the audit expectation gap concept.
The concept displays a high degree of fluidity in both the academic and professional discourses. The expectation gap in audit is a topic that attracts attention. The gap between the role of an auditor, as perceived by the auditor, and the expectations of the users of financial statements. Based on a questionnaire survey with auditors and investors, this paper discovers significant audit expectation gap aeg in the areas of auditors general responsibility, auditors responsibility for fraud detection, auditors responsibility for internal control reporting assessment, meaning of the audit report, and also auditors. The study explores audit expectation gap from diverse aspects, such as. According to the philosophy of auditing, a landmark 1961 work by renowned professor robert k. Put another way, the expectations gapbetween the professed desires of financial statement users and the confessed limitations of the current audit modelremains in full view. The critical, litigious environment which characterises auditing today can be traced to the audit expectationperformance gap. Meaning they divide or gap or difference and the contrast between reality and expected with respect to the audit profession, and can generally be classified expectations gap in auditing presidents into two classes.
In 2015, the usda audit program performed audits in 50 states, puerto rico, and canada, covering over 90. The expectation gap in auditing directory of open access. However, despite its apparent longevity in the accounting literature, there seems to be little consensus as to its precise definition. Abstract this study sought to examine users perception of reasonableness audit expectation gap in nigeria. The participants are accounting students in 300 levels and 400 levels in.
Closing the expectation gap in audit will support a more constructive discussion about how audit can evolve to meet societys expectations of it. The audit expectation gap between companies and their. Subsequent implication of the reporting auditors and well established corporate collapses have signaled audit expectation gap. Audit expectation gap is not a new phenomenon in auditing literature. The collapse of giant energy enron, and collusion of arthur andersen for audit. The aim of this paper is to uncover the causes of an audit expectation gap. Existence of the audit expectation gap and its impact on. It may be subdivided into a gap in communications and a gap in performance. In light of the study results and to narrow the expectations gap in the audit process in jordan, the researchers recommend the need to strengthen an auditors independence, by neutralizing the. The audit expectation gap aeg concept appears to be, unarguably, as old as the accounting and auditing profession, hence has been variously researched. Users of financial statements often believe that auditors are responsible for preventing and detecting all frauds and that they test transactions and balances more comprehensively than what actual. The role of the auditing profession chinwuba okafor 1 john i otalor 2 1. The audit expectation gap is denoted as the difference between what the public expects from an audit function and what the audit profession accepts the objective of auditing to be.
The impact of information technology on the auditing. However, in the public sector, the audit expectations gap is an emerging issue that has received little attention by reseachers. The new auditors reporting standards and the audit. Although its about expectations but still its scope and meanings have been defined in number of ways. The role of auditing education dublin city university business school research papers 19951996 no 11 c d liggio the expectation gap. The auditing literature has described and demonstrated extensively the existence of an expectations gap created by the fact that society may have expectations of auditors that go beyond the responsibility required by the professional regulations and standards. Mar 27, 2007 the audit expectation gap has been examined in many regions of the world, but the extent of such a gap has not been investigated in many middle. Closing the expectation gap in deterring and detecting financial statement fraud. Audit quality and the expectations gap the cpa journal. This may give the impression that the expectation gap is a relatively new phenomenon. This paper reports the findings of a questionnaire survey on the audit expectation gap conducted in malaysia. Expectation gap is the difference between public perception of an auditors role and responsibilities regarding audit engagements and what the auditors legal responsibilities actually are.
Defined as the gap between societys expectations of auditors and auditors perceived performance, it is seen to comprise reasonableness and performance components, the latter being subdivided into deficient standards and deficient performance. An investigation of audit expectation gap in bangladesh. The expectations gap has been acknowledged since the 1970s and studied extensively by academics and the profession, which until relatively recently regulated itself. In particular, the audited financial statements beneficiaries expectations exceed what auditors can reasonably be expected. The critical, litigious environment which characterises auditing today can be traced to the audit expectation performance gap. Difference in expectation can arise on the performance i. The intention behind auditing a financial record is to allow the auditor express an independent opinion on the financial statements whether it was prepared in all material aspects, in agreement with an accepted framework of financial reporting. There is concern that auditors and the public hold different beliefs about the auditors duties and responsibilities and the messages conveyed by audit reports.
This study attempts to assess the possible existence of an expectation gap between accountants and non. 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 critical to the auditing profession because the greater the unfulfilled expectations from the public, the lower is the credibility, earnings potential and prestige associated with the work of auditorslee et al. Penelitian ini memperlihatkan eksistensi audit expectation gap pada sektor publik. Abstract the research work examined the impact of audit education on audit expectation gap in nigeria.
The audit expectation gap is a phenomenon that exists for many years. The objective of this paper is to present an empirical investigation on the audit expectation gap for some privately hold firms in iran. The main objective of the study is to examine the role of auditing education in narrowing the audit expectation gap in nigeria. The other expectations gap in auditing the cpa journal. Impact of auditing education on audit expectation gap in nigeria. 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 differs from those used in prior literature. The expectation gap on the auditing profession a study about. The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectation from the public, the lower the credibility earning potential and prestige associated with the work of auditors. Historically, some in the profession might have portrayed the gap as being due to the publics lack of understanding rather than being a legitimate concern. The audit expectations gap is a prominent issue in the private sector. We call upon all stakeholders connected to the audit profession, including professional accountancy bodies, audit firms, regulators, journalists and politicians to contribute towards reducing the. The survey research design was employed and information was sought from respondents using a structured likert scale questionnaire. A roundtable summary 8 internal audit, it was acknowledged, depends on how the company utilizes it, so there was little consensus on its role in fraud detection. While the term of expectation gap was developing in north america, the same movements were growing in the uk. Rather than continue to rely on the episodic and samplingbased techniques used since the victorian era, it is time to consider a radically different approach. This approach allows us to attribute the audit expectation gap under the current regime to a failure of the public, the standardsetter, or the auditor. Porter 1993 in a survey to mitigate the expectation gap found that the full elimination of the 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 auditors expectation concerning audited financial statements.
The expectation gap in auditing article pdf available in managerial auditing journal 3. The audit expectation gap broadly measures public concern about audit. Dec 09, 2018 the expectation gap may be categorized into. The purpose of the study is to assess the significance of a reasonableness gap, a deficient performance gap and a deficient standards gap in the specific context of corporate fraud.
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