The Determinants of Audit Expectation Gap: An Empirical Study from Kingdom of Bahrain (original) (raw)
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Fraud detection and audit expectation gap: Empirical evidence from Iranian bankers
International Journal of Business and …, 2008
Our focus in this study is to determine the expectation gap in auditor's responsibility between auditors and bankers in Iran. In the view of fact, the key factor in enhanced credibility is the perception of stakeholders that the external auditors judge to financial statements providing through the management. In recent years corporate scandals were happened, so third parties demand auditors should be as an honest judge. Third parties expect the auditors should have more responsibility to detect fraud. The auditors although they view their role as bringing credibility to financial statements, know because of scope want limitation of their responsibility cannot detect all kinds of fraud. Therefore there is so called gap. Our findings indicate that there is significant gap between auditors and bankers in areas of auditor's responsibilities to detection fraud and illegal acts. In this study, the authors came to conclusion that the bankers have reasonableness expectation gap from auditors.
An Empirical Investigation of Audit Perceptions Gap in Saudi Arabia Paper number 02/03
business-school.exeter.ac.uk
This paper reports the results of an investigation on audit perceptions gap that exist in the Saudi environment. The methodology used in the study is a combination of mail questionnaires and semi-structured interviews. While Kruskal-Wallis one-way analysis of variance shows the directions of respondents' views on the issues, analysis of the semi-structured interviews provided further depth and coverage into the causes that shaped the respondents' perceptions. The principal findings of the study were that two macro factors viz. ideology and legal structure in the Saudi environment significantly affect audit perceptions gap. This indicates the need for policy makers to take appropriate measures to narrow the gaps signalled by the research by taking into account the two macro factors in the environment identified as shaping the perceptions of both auditors and users, if the auditing profession is to fulfil the desired role and objectives in Saudi Arabia.
An empirical study of audit expectation-performance gap: The case of Libya
A B S T R A C T The purpose of this research is to empirically examine the causes of the audit expectation gap in Libya. The study builds on the frameworks developed by Porter (1993) and Porter & Gowthorpe (2004) to investigate the influence of the audit expectation gap to the auditing profession in the case of Libya. The data was collected through a questionnaire survey randomly selected members of four broad interest groups including auditors, auditees and audit beneficiaries both inside and outside the financial community were followed by in-depth interviews. A total of 988 questionnaires were distributed from which 431 questionnaires with usable responses were received from four groups. The overall usable response rate was 44%, ranging from 47% for the financial community audit beneficiaries to 41% for the auditors group. The findings of the study revealed that there exists audit expectation-performance gap and that the gap is as result of the following factors in different levels of percentages. Deficiency standards and deficient performance gaps constitute 49% and 15%, respectively, of the audit expectation-performance gap. The audit expectation-performance gap derives from society having unreasonable expectations of auditor's significant proportion 36% of the gap. As result of the following interviews demonstrated that the objectives of auditing are not as clear to the financial statement users as they are to the auditors and the financial statement preparers in Libyan business environment. Further, we observe that reducing the expectations gap is to improve knowledge responsibilities between the auditors and user groups and understanding of the auditor's role and responsibilities through the provision of auditing illegal acts.
Bridging of something requires a gap, and Audit expectation gap still exists since the time it was identified in 1970s, and to cover a gap requires identification of areas which needs to be covered, specially the areas which are the reason of creation of this gap. This paper attempts to expand the literature by identifying the factors which result in creation of this gap through a comprehensive review of literature, specially focusing the key countries in which studies are made regarding audit expectation gap as well as to highlight the groups among which the audit expectation gap exists, so that all necessary aspects should be taken into necessary consideration, and necessary attempts should be made to cover it. It is revealed that audit expectation gap exists due to difference of opinions about the factors like auditors’ role with respect to company and financial statements, audit knowledge, auditor’s attitude towards their profession, audit process, auditors’ independence, fraud detection, importance of auditing, preparation of financial statements, performance of company, parties to whom auditors are responsible, prohibitions and regulations of audit firm, reliability of financial reports and usefulness of financial statements among auditors, accountants, bankers, brokers, creditors, directors, educators, government, investors, journalists, jurors, shareholder, students and government. Various policy implications are also discussed herewith.
Establishing the Relationships Between Public Perception and Audit Expectation Gap
Charles Osei-Assibey, 2021
the Relationships between Public Perception and Audit Expectation Gap has created an expectation gap between what the duties of auditors are and what the public expect of auditors. This research therefore sought to examine the perception of the public on audit expectation gap in the Sekondi Takoradi Metropolis. Descriptive research design was used. A sample size of 210 respondents was randomly sampled from the population. Data were collected using questionnaire. Data was processed using Statistical Package for Service Solutions (SPSS) version 22.0. Results were analysed using frequencies, tables and charts and correlation analysis was done to establish the relationship between audit expectation gap and perception of the public. The results showed that majority of the public perceive auditors' role to include detection of errors and fraud and disclose illegalities and irregularities in a company's financial statement. The results also showed that majority of respondents perceive the quality of audit reports nowadays to be questionable and others also perceive auditors' report only to please management. It was also showed that factors such as society's failure to understand the duties and roles of auditors and society's unreasonable expectations of auditors affected audit expectation gap. There was however a strong positive correlation between auditors' responsibility in detection of error and fraud and audit expectation gap. It is recommended that the roles and duties of auditors should be clearly defined through education for society to have a clear understanding of the roles of external auditors.
Audit Expectation Gap between Auditors and Users of Financial Statements
European Journal of Business and Management, 2014
The purpose of this study is to identify the variable(s) that is/are base of audit expectation gap between auditors and users of financial statement which includes bankers (treasury fund managers) and investors (individual as well as corporate). The variables used are Audit reliability, Audit responsibility and Usefulness of audited financial statements. The data was collected through questionnaire which was distributed in sample size n=300 at random consisting of 100 subjects from each of three groups and n=259 questionnaire was received back. The questionnaire consists of two sections, first section collected demographic data and other section enclosed 16 semantic differential belief statements. The statistical technique "Independent sample t-test" was performed in order to recognize the variable(s) that is/are base of audit expectation gap. This study finds that the gap is existed between auditor and investor in two variables which are Reliability and Usefulness of audited financial statement. The reason behind this gap is lack of proper education and understanding regarding audit standards and audit practices so this gap will be reduce by giving adequate knowledge and awareness of audit to the users of financial statements.
Audit expectation gap: an empirical analysis
Future Business Journal
The financial debacles that occurred in the companies like Enron, WorldCom, and Xerox in the USA, Lehman Brothers, Polly Peck in the UK and African Petroleum Plc., Cadbury Plc., in Nigeria had created public distrust with the auditors. The era when the auditor will say 'trust me' and that being accepted is over. Now, they must earn the public trust. This study provides an empirical analysis of the scope and nature of audit expectation gap in Nigeria. We used a descriptive and survey research design to achieve the objective of the study. We also collected data through primary source, using structured questionnaire. The study used Mann-Whitney U test and Kolmogorov-Smirnov Z test for the analysis of data and test of normality of distribution, respectively. The results confirmed that audit expectation gap exists in Nigeria, and the new auditor's report did not have any serious impact in reducing the gap. From the outcome of this study, the audit expectation gap primarily arose from the unreasonable expectation of the users due to their lack of understanding of the roles of auditors. We recommend the launching of a new business-reporting model geared towards releasing more non-financial information to the public and with clear description of the role of independent audit.
Corporate fraud and the audit expectations gap: A study among business managers
Journal of International Accounting, Auditing and Taxation, 2009
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 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. In order to distinguish all three elements of the expectations gap, respondents need a certain level of expertise on fraud. Therefore, in this research the audit expectations gap is studied primarily from the perspective of three groups of business managers, based on the fact that they typically have a special responsibility in fraud cases. Bankers are used as a control group to assess the potential differences between the views of business managers and 'society in general'. This study provides clear evidence of a substantial audit expectations gap in the context of fraud, both with respect to the auditor's performance as well as the auditor's formal obligations as laid down in existing standards. However, compared to bankers, business managers are less inclined to judge auditors' performance of existing duties as inadequate, and see fewer points where auditing standards should be amended.
Investigation of Expectation Gap between Auditors and Investors in Bangladesh
International Journal of Current Science Research and Review, 2022
The goal of this study is to determine the variable(s) that is/are sources of audit expectation gap between auditors and individual investors (i.e., financial statement users) in Bangladesh. The variables used are Internal Control, Fraud Detection, Appropriateness in using accounting numbers and lastly Reliability. In this research the sample size was selected purposively, a total of 30 auditors were selected from different audit firms in terms of firm’s size, revenue, and practices again a total of 30 investors were selected purposively. A structured format of questionnaire was used where the response options were predetermined to acquire information directly from auditors and investors. The questionnaires consist of two sections, first section collected demographic data and second section enclosed 12 semantic differential belief statements. Same questionnaire was given to two independent sample groups (auditors and investors) to identify expectation gaps. To identify the variable(...
Assessing Public Perception on Audit Expectation Gap: A Study in Sekondi Takoradi Metropolis
Charles Osei-Assibey, 2021
Globally, the public perceive auditors to play certain roles in the financial reporting process. However, most of these perceptions have been different from the actual roles for which auditors are mandated to play. This has created an expectation gap between what the duties of auditors are and what the public expect of auditors. This research therefore sought to examine the perception of the public on audit expectation gap in the Sekondi Takoradi Metropolis. Descriptive research design was used. A sample size of 210 respondents was randomly sampled from the population. Data were collected using questionnaire. Data was processed using Statistical Package for Service Solutions (SPSS) version 22.0. Results were analysed using frequencies, tables and charts and correlation analysis was done to establish the relationship between audit expectation gap and perception of the public. The results showed that majority of the public perceive auditors' role to include detection of errors and fraud and disclose illegalities and irregularities in a company's financial statement. The results also showed that majority of respondents perceive the quality of audit reports nowadays to be questionable and others also perceive auditors' report only to please management. It was also showed that factors such as society's failure to understand the duties and roles of auditors and society's unreasonable expectations of auditors affected audit expectation gap. There was however a strong positive correlation between auditors' responsibility in detection of error and fraud and audit expectation gap. It is recommended that the roles and duties of auditors should be clearly defined through education for society to have a clear understanding of the roles of external auditors.