The Audit Expectation Gap Analysis

1922 WordsJan 8, 20158 Pages
The audit expectation gap The meaning of the expectation gap involves argument concerning the contradictory meaning of what an audit is to user of financial statement, the public and the audit profession. Expectation gap is the difference between what the public assumes to be the role of audit and what the audit profession claim their role is in carrying out the audit function. . All the theories above describe the expectations the stakeholders have of the auditors, including protection against fraud, warning of future insolvency, general re-assurance of financial well-being, safeguards for auditor independence and understanding of audit reports. Although these expectations seem to be rather natural, however, an audit expectations gap does exist based mostly on the diversity of views about the audit function. The gap exists between what the public expects the auditor to do and what the auditor can and should do. Several suggestions were made to narrow the expectations gap, as well as providing statutes in order to describe audit functions especially concerning the responsibility to detect and report errors and fraud. Component of audit expectation gap Reporters have credited the expectations gap to mean that users of financial statement are confused, ignorant or lack education. Porter in his analyses divided the expectation gap into three different component which includes a) sub-standard performance b) deficient standards and c) unreasonable expectations. a) The
Open Document