A Critical View of the Audit Expectation Gap and Audit Rotation

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Audit Expectation Gap & Audit Rotation A Critical View Auditing is one of the most critical fields where the external auditors are always subjected to criticism and legal regulations which are mostly directed against them. Mostly this criticism arises because of lack of sufficient understanding of how the company law and auditing standards work and also due to related misconception about the actual role of an auditor (Porter, 1993). This lack of understanding is called expectation gap where the outcomes of the audit expected and its actual purpose varies. One solution to this fundamental issue is to reduce this expectation gap by providing a clear definition of auditor's role and also the audit function that is required to be performed by him. However, during this defining phase, it is necessary to consider whether an audit rotation would reduce this audit expectation gap. This term, 'Audit Expectation Gap' was coined by Liggio in 1974. It was established as the perceived difference between the desired performance levels as observed by the independent auditor and by the user of financial statements (Liggio, 1974, p.2). Tweedie further elaborated this predicament by saying, 'The public appears to require (1) a burglar alarm system (protection against fraud).....(2) a radar station (early warning of future insolvency).....(3) a safety net (general re-assurance of financial well-being).....(4) an independent auditor (safeguards for auditor independence).....and (5)

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