Audit Disaster Futures: Antidotes for the Expectation Gap

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Managerial Auditing Journal
Emerald Article: Audit disaster futures: antidotes for the expectation gap? Fran M. Wolf, James A. Tackett, Gregory A. Claypool

Article information:
To cite this document: Fran M. Wolf, James A. Tackett, Gregory A. Claypool, (1999),"Audit disaster futures: antidotes for the expectation gap?", Managerial Auditing Journal, Vol. 14 Iss: 9 pp. 468 - 478 Permanent link to this document: http://dx.doi.org/10.1108/02686909910301556 Downloaded on: 04-12-2012 References: This document contains references to 56 other documents Citations: This document has been cited by 11 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 3276 times since 2005. *

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Discusses issues associated with the expectation gap and posits that the profession 's efforts to educate users as to the nature of the audit process is a necessary, but insufficient, response. A two-part strategy is proposed to effect structural change of the auditorclient environment. Part one of the strategy calls for greater involvement of regulators in selecting the external auditor and requiring auditor rotation. Part two of the strategy proposes market-based instruments, audit failure permits and audit disaster futures, to deal with remaining audit risk.

Abstract

The expectation gap
In current auditing praxis, few concepts are as important as auditor independence. The product of an audit is neither the auditor 's report nor the investigation itself, but rather the increased credibility attached to the audited financial statements. The key factor
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Managerial Auditing Journal 14/9 [1999] 468±478 # MCB University Press [ISSN 0268-6902]

in enhanced credibility is the perception of external stakeholders that the external auditor ``judge ' ' is impartial and without conflicts of interest. Without this perceived independence, an audit report would be viewed as nothing more than a company advertisement. The auditing profession itself recognizes this with its emphasis on independence in appearance as well
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