Research Journal of Finance and Accounting www.iiste.

org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%*

Narrowing the Expectation Gap in Auditing: The Role of the
Auditing Profession
+hinwu,a &-afor
1
John I &talor
2.

1. /e"art0ent of Accounting( 1ni2ersit3 of 4enin( !. 5 .4 116%(4enin +it3( 7do State( Nigeria
2. +hris Awili 8 co +hartered Accountants#( $( A-"a-"a2a Street( !. &. 4o9 %*9)(4enin +it3( 7do State(
Nigeria
. 7-0ail of the corres"onding author: ;ohn.otalor<g0ail.co0

Abstract
=he stud3 sought to ascertain the role of the auditing "rofession in narrowing the audit e9"ectation ga". Self-
ad0inistered >uestionnaires were used in the stud3. =he data generated fro0 the res"onses of the su,;ects were
anal3?ed using descri"ti2e and statistical anal3sis through the co0"uter S!SS 16.)#.
=he result shows that the "u,lic is ignorant of the duties of the auditor and this lac- of -nowledge is res"onsi,le for
unreasona,le e9"ectations of the "u,lic fro0 auditors.
4ased on the findings and conclusion( it was reco00ended that the "u,lic need 0ore education on the duties and
res"onsi,ilities of the auditor( the standard auditor@s re"ort should ,e e9"anded to include disclai0er clauses clearl3
showing that it is not a certificate or guarantee of the financial soundness of the auditee( it should ,e clearl3 stated in
the audit re"ort that the auditor is not the +o0"liance &fficer of the audited co0"an3 and that the auditors re"ort
should add that the o"inion e9"ressed ,3 the auditor should not ,e construed to 0ean a guarantee of accurac3 of the
financial state0ents.
Keywords: Audit e9"ectation ga"( auditing "rofession( "u,lic -nowledge( and "u,lic confidence.

1 !ntroduction
Accounting and auditing are critical co0"onents of an3 econo0ic enter"rise as the3 "la3 an i0"ortant role in
contri,uting to the effecti2eness and efficient functioning of ,usiness o"erations( the ca"ital 0ar-ets( and the
econo03 ,3 adding credi,ilit3 to financial state0ents Aee( A?ha0 and Bandasa03( 2))$#. Chile accounting -ee"s
trac- of transactions as ,asis for "ro2iding infor0ation a,out the enter"rise through financial re"orting to users of the
infor0ation( audit e9"resses an o"inion on the financial state0ents whether it "resents a true and fair 2iew of the
enter"rise.
=he auditing "rofession ,elie2es that the wides"read criticis0 and litigation against auditors 0a3 ,e due to auditors
not 0eeting the !u,lic@s e9"ectations of the0 on the state of affairs of the co0"anies audited. Aueng( +ora0(
+oo"er( +osserat and Dill 2))%# "osit that for 0ore than *) 3ears or so( the auditor "la3ed an Eenhancing roleF ,3
i0"ro2ing the credi,ilit3 of the financial infor0ation. =hus( auditors occu"3 a "ri0e "lace in ,ridging the
e9"ectation ga" ,etween 0anage0ent and the users of the "u,lished financial re"orts.
5an3 users do not see0 to understand the nature of the attest function( es"eciall3 in the conte9t of an un>ualified
o"inion as the3 ,elie2e that an un>ualified o"inion 0eans fool"roof financial re"orting. So0e feel that the auditor
should not onl3 gi2e an o"inion( ,ut also inter"ret the financial state0ents to ena,le users e2aluate whether to in2est
in the co0"an3. =hese e9"ectations create a ga" ,etween auditors and users e9"ectation of the audit function.
5oreo2er( users "lace the res"onsi,ilit3 for narrowing the ga" on auditors and others in2ol2ed in "re"aring the
financial state0ents. =his stud3 intends to e9"lore the role of the auditing "rofession in narrowing the audit
e9"ectation ga" if not eli0inating it. =he o,;ecti2es of this stud3 were to ascertain whether the "u,lic is con2ersant
with the legislati2e( regulator3 and "rofessional "ronounce0ents on the res"onsi,ilit3 of the auditors( and whether
the duties and res"onsi,ilities are such that the auditors should reasona,l3 ,e e9"ected to "erfor0. =o that end the
following h3"otheses were for0ulated:

Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%%

H
1
the audit expectation gap is not caused by the publics lack of knowledge of the legal, regulatory and
professional bodies pronouncements on the duties and responsibilities of auditor.
H
2
the audit expectation gap does not result from the public expectation of the auditor to perform the duties
and responsibilities; therefore, the auditor should not reasonably be expected to perform the responsibilities.

" #iterature Re$iew and Theoretical %ra&ewor'
=he ter0 e9"ectation ga" has ,een used not onl3 in the accounting literature( ,ut also in other fields. For e9a0"le( to
descri,e the "erce"tions of the infor0ation s3ste0s industr3 relating to the acade0ic "re"aration of graduates
=rauth( Farwell and Aee( 199*#G difference in e9"ectations of ad2ertising agencies and their clients with res"ect to
ca0"aign 2alues 5ur"h3 and 5a3nard( 1996#G differences in relation to 2arious issues associated with cor"orate
en2iron0ental re"orting on one hand and the clash ,etween auditors and the "u,lic o2er "referred 0eanings of the
nature( o,;ecti2es and outco0es of an audit Si--a( !u9t3( Cil0ott and +oo"er (199$ and /eegan and Ran-in( 1999#G
the ga" in ,an-s ,etween the transaction-audit a""roach that e2ol2ed during the industrial age and the infor0ation
age Singh( 2))%#G and a financial re"orting e9"ectation ga" Andrew(2))*#.
=he ter0 Haudit@ is deri2ed fro0 the Aatin word Haudire@( which 0eans Hto hear@ and auditor literall3 0eans Hhearer.@
=he use of this ter0 was ,ased on custo0ar3 role of audit function in the sense that the "ersons res"onsi,le for
0aintenance of accounts were e9"ected to go to so0e i0"artial and e9"erienced "ersons( nor0all3 ;udges( who used
to hear the accounts "re"ared ,3 the "ersons in charge and e9"ress their o"inion a,out their correctness Salehi and
Rosta0i( 2))9#.
Aiggio 197%# was the first to introduce the ter0 Eaudit e9"ectation ga"F to audit literature. Ie defines e9"ectation
ga" as the difference ,etween the le2els of e9"ected "erfor0ance as "ercei2ed ,3 ,oth users of financial state0ent
and the auditor. In 197$( the definition was e9tended ,3 the +o00ission on Auditors Res"onsi,ilities+AR# +ohen
197$# which e9a0ined whether a ga" e9ist ,etween what the "u,lic e9"ects or needs and what auditors can and
should reasona,l3 e9"ect to acco0"lish !orter and Dowthor"e( 2))%#. =he audit e9"ectation ga" has also ,een
defined as the difference in ,eliefs ,etween auditors and the "u,lic a,out the duties and res"onsi,ilities assu0ed ,3
auditors and the 0essage con2e3ed ,3 the audit re"orts and the difference ,etween what the "u,lic e9"ects fro0 the
auditing "rofession and what the "rofession actuall3 "ro2ides 5onroe and Coodliff( 199*G Jennings( Rec-ers and
Bneer( 199*#.
Aiggio 197%# cited in Ai0"erg 19$6# and !orter 199*# o,ser2e that these definitions do not e0,race the notion
that auditors 0a3 not acco0"lish He9"ected "erfor0ance@ or what the3 Hcan and reasona,l3 should@.
70"irical studies conducted in different countries of the world atte0"t to e9"ose the nature of audit e9"ectation ga"
do0inant in those cli0es. =hese studies re2eal the difference in "erce"tions on audit e9"ectation ga" a0ong the
different seg0ents of the societ3 Aee( 197)G 4ec-( 197%G 4aron( Johnson( Searfoss and S0ith( 1977G Iu0"hre3(
5oi?er and =urle3( 199*G !orter( 199*GFad?l3 and Ah0ad( 2))%G /i9on(Coodhead and Sohli0an( 2))6G
&-aro(2))9G5c7nroe and 5artens(2))1G Aow (19$)G Aow( Foo and Boh( 19$$ G 4est( 4uc-,3 and
=an(2))1GIian(2)))G 5artins( Bi0 and A03(2)))G +handler( 7dwards and Anderson(199*G +a0eron(199*G
Aowe(199% G 7"stein and Deiger( 199%G 5cInnes(199%G Dloec- and Jager(199* G +hung(1996GDra0ling and
Schat?,erg(1996G Noordin(1999G Iudai,(2))2G Siddi>ui and Nasreen(2))% G. Ain and +hen( 2))%G Ioo-s( 1991G
Forgart3( Ieian and Bnutson( 1991G Daa( 1991#
A nu0,er of studies ha2e ,een conducted to e9a0ine the causes of audit e9"ectation ga". =hese studies re2eal the
following as factors contri,uting to the e9istence of the ga": the co0"licated nature of audit function( +onflicting
Role of Auditors( Retros"ection 72aluation of Auditors@ !erfor0ance( =i0e Aag in Res"onding to +hanging
79"ectations( Self Regulation !rocess of the Auditing !rofession and the 1nawareness and 1nreasona,le
79"ectations Aee and A?ha0( 2))$a#.
As a result of the detri0ental effects of the audit e9"ectation ga" on the financial re"orting and auditing "rocess(
researchers and the auditing "rofessional ,odies ha2e conducted 2arious studies to identif3 effecti2e 0ethods for
narrowing the ga". =he 0ethods that ha2e ,een identified include: 7ducation JAee( A?ha0 and Bandasa03( 2))$#(
5onroe and Coodliff 199*#( Ariff and Ros0aini 2))6# and Dra0ling et al( 1996#K( 79"anded Audit Re"ortJNair
and Ritten,erg 19$7#( Da3 and Schelluch 199*# 5onroe and Coodliff 199%#( Iatherl3( Jones and 4rown( 1991#K (
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%6

Structured Audit 5ethodologies J!ur2is 19$7#G Boh and Coo 199$#( 4orit?( Da,or and Ae0on 19$7#K( 79"ansion
of Auditors@ Res"onsi,ilities and enhance0ent of Auditor Inde"endenceJ Aee( et al. 2))$#( Iu0"hre3 et al( 199*(
Bnutson( 199% and &@5alle3( 199*#( Ra,inowit? 1996#K
Others include
a# !orter 199*# ad2ocated the ado"tion of the following a""roaches in order to narrow the audit e9"ectation-
"erfor0ance ga": strengthening and 0onitoring auditors@ "erfor0ance ( i0"ro2ing the >ualit3 control in
audit fir0s( enhancing the education of auditing "ractitioners( and introducing new auditing standards
,# Strengthening the role of the Audit +o00ittee in 0onitoring and control of the auditors@ wor- &-aro(
2))6#.

( )ethodology
/ata was collected ,3 self-ad0inistering >uestionnaires to 1*) res"ondents rando0l3 sa0"led fro0 Accounting
students and teachers of the 1ni2ersit3 of 4enin( 4enson Idahosa 1ni2ersit3 and A0,rose Alli 1ni2ersit3( 7-"o0a(
Accountants in !ractice in 7do State and the in2esting "u,lic in 7do State. &ut of the 1*) >uestionnaires
ad0inistered onl3 9% were returned constituting a,out 72 L. Ce consider this res"onse rate to ,e 2er3 satisf3ing and
large enough to ,e a,le to 0a-e conclusions and generali?ations.

* Results
=he data generated fro0 the res"onses of the su,;ects were anal3?ed using descri"ti2e and statistical anal3sis
through the co0"uter S!SS 16.)#.
Table 1: AN+,A Results
,ariables -f % Reliability
!14BR!!
!7A1/!R
1
1
16.1*7
6%.692
).)))
).)))

=he result of the anal3sis of 2ariance out"ut as generated ,3 the S!SS is re"orted in ta,le 1 a,o2e. In the result( the
factor anal3?ed is audit e9"ectation ga" A1/7MDA!#. =he critical calculated f-2alue for the 2ariance ,etween
A1/7MDA! and "u,lic -nowledge of the regulator3 and "rofessional "ronounce0ents on the duties of the auditor
!14BR!!# is 16.*$* which is greater than the critical f-2alue of 9.7$ at the 6 "ercent le2el of significance. =his
i0"lies that the 0ore the ignorance of the "u,lic a,out the duties and res"onsi,ilities of the auditor the higher the
e9"ectation ga". =hus( we re;ect the null h3"othesis and acce"t the alternati2e h3"othesis that a significant
relationshi" e9ist ,etween the de"endent and inde"endent 2aria,les. =he f-2alue for 2ariance ,etween A1/7MDA!
and "u,lic e9"ectations of the auditor to "erfor0 the res"onsi,ilities !7A1/!R# is 6%.962 which is greater than the
critical f-2alue of 9.7$ at the 6 "ercent le2el. =his i0"lies that "u,lic e9"ectation of the auditors to "erfor0 the stated
res"onsi,ilities which are unreasona,le causes audit e9"ectation ga". =hus( we acce"t the alternati2e h3"othesis
which i0"lies that a significant relationshi" e9ists ,etween audit e9"ectation ga" and the "u,lic e9"ectation of the
auditor to "erfor0 the res"onsi,ilities.
Table ": The #ogit and Probit Results
,ariables #ogit Probit
.oefficient /0statistic .oefficient t0ratio
+onstant
!14BR!!
!7A1/!R
-*7.*6$6
1.)61
).$976
-2.9*9
*.*)9
*.1%6
-21.*1%
).6)%6
).6)$9
-*.11*
*.6)9
*.*7*
5ac.Faden R
2
).7$6 ).79
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%6


=he result of the 0ulti"le regression 0odels is "resented in ta,le 2 a,o2e. In the result( the "ro,it and logit outco0es
are "laced side ,3 side. =he results ha2e i0"ressi2e diagnostic statistics. =he 5cFadden r-s>uared 2alue for the logit
result is ).7$6( while the 2alue for the "ro,it 0odel is ).79*. =hus( o2er 7$ "ercent of the "ro,a,ilistic distri,ution of
an e9act re"resentation of the res"onses is ca"tured in the 0odel.
=o in2estigate the direct relationshi" a0ong these 2aria,les( the esti0ations are "erfor0ed in for0 of si0"le
regression e>uations. 5oreo2er( the "ro,it 0odel is used for the esti0ation since the 0ethod "roduced ,etter results
in the 0ulti"le regression 0odels. =he results are "resented under the res"ecti2e h3"otheses in e>uations 1# and 2#
as follows:
!. Hypothesis "
=he audit e9"ectation ga" is not caused ,3 the lac- of "u,lic -nowledge of the statutor3 legal#( regulator3 and
"rofessional ,odies@ "ronounce0ents on the duties and res"onsi,ilities of auditors.
7>uation 1#:
A1/7MDA! N -1.997 O ).1)21 !14BR!!
-2.)96# 2.96%#.
5cFadden R2 N ).1%
=he results of the 0odel a,o2e are si0ilar to that of the regression 0odels. =he "ositi2e and significant relationshi"
indicated ,etween audit e9"ectation ga" and "u,lic -nowledge of statutor3( regulator3 and "rofessional ,odies@
re>uire0ents of the auditor shows that the "u,lic is ignorant of the duties and res"onsi,ilities of the auditors as
re>uired ,3 law( regulator3 and "rofessional ,odies. =he significance of this i0"act is seen ,3 considering the slo"e
coefficient in the 0odel. =he ?-2alue of the coefficient is 2.96%. =his 2alue is greater than the 6 "ercent critical ?-
2alue of 1.96. =hus( we acce"t that a significant and "ositi2e relationshi" e9ists ,etween A1/7MDA! and
!14BR!!. &nce again( it is shown that the 0ore the "u,lic lac- of -nowledge of regulations on auditors( the higher
the audit e9"ectation ga".
#. Hypothesis ""
=he audit e9"ectation ga" does not result fro0 the "u,lic e9"ectation of the auditor to "erfor0 the duties and
res"onsi,ilitiesG therefore( the auditor should not ,e e9"ected to "erfor0 the res"onsi,ilities.
7>uation *#:
A1/7MDA! N -1.9277 O ).1*9% !7A1/!R
-*.2*%# %.66%#.
5cFadden R
2
N ).*76
In this 0odel( the results are >uite i0"ressi2e. =he 5cFadden R
2
2alue of ).*76 is high considering that a si0"le
0odel was esti0ated. Fro0 the result of the slo"e coefficient( it is seen that the ?-2alue of %.66% is greater than the 6
"ercent critical ?-2alue of 1.96. =herefore( we acce"t the alternati2e h3"othesis. =his i0"lies that "u,lic e9"ectation
of the auditors to "erfor0 the res"onsi,ilities which are largel3 unreasona,le creates audit e9"ectation ga".
=hus it is shown that 0an3 of the "u,lic e9"ectations of the auditor are unreasona,le. For e9a0"le( e9"ecting the
auditor to e9a0ine e2er3 transaction entered ,3 the client or e9"ecting the auditor to e9a0ine the client@s entire
annual re"ort will ,e e9"ecting too 0uch fro0 the auditor.
4.1 Discussion of Findings
Fro0 the in2estigations( it was re2ealed that 69$ out of $91 67.12L # of res"ondents are actuall3 not aware of what
is e9"ected of the auditors as enshrined in the statute ,oo-s and other rele2ant docu0ent fro0 other ,odies
regulator3 and "rofessional#. =his is de"icted ,3 the "ositi2e and significant relationshi" that e9its ,etween audit
e9"ectation ga" and "u,lic -nowledge of legal( regulator3 and "rofessional ,odies@ "ronounce0ents on the duties
and res"onsi,ilities of auditors. =his result is in consonance with the findings of !orter 8 Dowthor"e 2))%# where
a,out 62L and 69L of the societ3 grou" in the 1nited Bingdo01B# and New PealandNP# res"ecti2el3( e9hi,ited
H-nowledge ga"@ in res"ect of auditors res"onsi,ilities i.e. the3 were unsure or in error a,out auditors@
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%7

res"onsi,ilities#.
It was also o,ser2ed that 0an3 ,elie2ed that it is the res"onsi,ilit3 of the auditor to guarantee the client with a
Hclean@ audit re"ort as well as ensure that financial state0ents are accurate. For e9a0"le !orter 8 Dowthor"e 2))%#
finds that %6L( %2L of the "u,lic in 1B and NP res"ecti2el3 and this stud3 find that %% out of 9) %%L# of the
"u,lic in Nigeria e9"ected auditors to guarantee that an auditee whose financial state0ents recei2e an un>ualified
audit re"ort is financiall3 sound. 5oreo2er( the sur2e3 re2ealed unreasona,le e9"ectations fro0 the auditors ,3 the
"u,lic. =his is de"icted ,3 the "ositi2e i0"act of "u,lic e9"ectation of the auditors to "erfor0 the res"onsi,ilities on
audit e9"ectation ga". =his agrees with the findings of the stud3 conducted ,3 !orter 199*# and !orter 8 Dowthor"e
2))%# in the 1nited Bingdo0 and New Pealand which re2ealed that 0an3 of the H"u,lics@ e9"ectation of the
auditors are Hunreasona,le e9"ectations@ and that the reasona,l3 e9"ected res"onsi,ilities are not currentl3 re>uired
of the auditors. For e9a0"le J%77 out of $7*6%.6%L#( Kare of the o"inion that auditors should "erfor0 the following
duties: e9a0ining and re"orting on the relia,ilit3 of infor0ation in the entire annual re"ort( e9a0ining and re"orting
on co0"liance with all stoc- e9change go2ernance re>uire0ents to listed co0"anies( e9a0ining and re"orting on
auditee@s non-financial "erfor0ance( and e9a0ine and re"ort on the relia,ilit3 of infor0ation on directorsQsenior
e9ecuti2e re0uneration "olic3 and records( etc.
In order to deter0ine whether 2alid conclusions could ,e drawn fro0 the sur2e3 result( we used a "ara0etric
statistical 0ethod R Anal3sis of 'ariance to in2estigate the relationshi" ,etween the 2aria,les A1/7MDA!(
!14BR!! and !7A1/!R# and econo0etric anal3sis to e0"iricall3 in2estigate the direction of the h3"othesi?ed
relationshi"s a0ong the 2aria,les through regression anal3sis &rdinar3 Aeast S>uare and !ro,it and Aogit
techni>ues#(while !orter 8Dowthor"e 2))%# used Cilco9on-signed ran-s test to deter0ine whether the res"onses of
the sur2e3 sa0"le could ,e e9tra"olated to and acce"ted as re"resenting the o"inions of the rele2ant interest grou"s
as a whole and 5ann-Citne3 test to esta,lish whether the difference in o"inions of the interest grou" could ,e
acce"ted as reflecting the o"inion of the interest grou" fro0 which the sa0"les were drawn.

1 .onclusion
=he "u,lic a""ears ignorant of what is e9"ected of the auditors as enshrined in the statute ,oo-s and other docu0ents
issued ,3 regulator3 and "rofessional ,odies. =his "u,lic@s lac- of -nowledge no dou,t is res"onsi,le for their
unreasona,le e9"ectations fro0 the auditors. =his wor- shows that it is necessar3 to educate the "u,lic the 0ore to
enhance their understanding of the duties and res"onsi,ilities of the auditor and there,3 reduce their unreasona,le
e9"ectations fro0 the auditors. =herefore( efforts should ,e 0ade ,3 all concerned to i0"le0ent the
reco00endations 0ade ,elow.
&n the strength of the conclusion of this stud3( the following reco00endations are 0ade:
1. =he "u,lic need to ,e educated 0ore on the duties and res"onsi,ilities of the auditor to i0"ro2e their
understanding of the wor- of the auditor.
2. =he standard auditor@s re"ort should ,e e9"anded to include disclai0er clauses clearl3 showing that it is not
a certificate or guarantee of the financial soundness of the auditee.
*. It should ,e clearl3 stated in the audit re"ort that the auditor is not the +o0"liance &fficer of the auditee.
%. =he auditors re"ort should add that the o"inion e9"ressed ,3 the auditor should not ,e construed to 0ean a
guarantee of accurac3 of the financial state0ents

References
Ariff( 5.B. 8 Ros0aini( S. 2))6#( An e0"irical stud3 on the effects of undergraduate auditing course in reducing
audit e9"ectation ga" at 1ni2ersiti=enegaNasional 1NI=7N#( !a"er !resented at AAAA +onference.
Andrew ( I.2))*#( +or"orate financial re"orting: theor3 and "ractice(SAD7 !u,lication( Aondon.
A?ha0(5.d.(Susof( N.P.5.( Aee( =.I.( 5oha0ad( R. 8 &;o( 5. 2))7#( !ractical training and audit e9"ectation ga":
the case of accounting undergraduates of 1ni2ersiti 1tara( 5ala3sia( "a"er "resented at % A +onference( Jog;a-arta.
A2aila,le at: htt":QQssrn.co0Qa,stracctN16766)2. 'iewed $th August( 2)11.
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%$

4aron( +./.( Johnson( /.A. Searfoss( /.D. 8 S0ith( +.I. 1977#( 1nco2ering cor"orate irregularities: are we closel3
the e9"ectation ga"T $ournal of !ccountancy( 'ol. 1%%( &cto,er( "". 2%*-6).
4ec-( D.C. 197%#( !u,lic accountants in Australia R their social role( !ustralia !ccounting %esearch &oundation(
5el,ourne.
4est( !.J.( 4uc-,3( S. 8 =an( +. 2))1#( 72idence of the audit e9"ectation ga" in Singa"ore( 'anagerial !uditing
$ournal( 'ol. 16( No. *( "". 1*%-1%%.
4orit?( J.7.( Da,or( 4.J. 8 Ae0on( C.5. 19$7#( !n experimental study of re(iew of preliminary audit strategies by
external auditors, +anadian Acade0ic Accounting Association( +anada.
+a0eron( A. 199*#( /o chartered accountant li2e u" to s0all ,usiness e9"ectationsT !ccountants $ournal, 'ol. 72(
June( "". 76-$.
+handler R( 7dwards( J.R. 8 Anderson( 5. 199*#( +hanging "erce"tions of the role of the co0"an3 auditor( 1$%)-
19%)( !ccounting and #usiness %esearch, 2*( No. 92( "". %%*-%69.
+hung( J. 1996#( Auditors@ confidence and the audit e9"ectation ga"( !ustralian !ccountants( 'ol. 66( No. 6( "". 26-
*).
+ohen +o00ission: +o00ission on Auditors@ Res"onsi,ilities J+ARK( 197$#( %eport, )onclusions and
%ecommendations, New Sor-: AI+!A.
/egan( +. 8 Ran-in( 5. 1999#( =he en2iron0ental re"orting e9"ectation ga": Australian e2idence( 4ritish
Accounting Re2iew( No *1( *1*-*%$.
/i9on( R.( Coodhead( A./. 8 Sohli0an 2))6#. An in2estigation of the e9"ectation ga" in 7g3"t( 5anagerial
Auditing Journal( 21( *: 29*-*)2.
7"stein( 5.J. 8 Daiger( 5.A. 199%#( In2estor 2iews of audit assurance: Recent e2idence of the e9"ectation ga"(
$ournal of !ccountancy( 'ol. 177( Januar3( "". 6)-6.
Fad?l3( 5.N. 8 Ah0ad( P. 2))%#( Audit e9"ectation ga": the case of 5ala3sia( 'anagerial !uditing $ournal( 'ol.
19( No. 17( "". $97-916.
Fogart3( =.J( Ieian( J.4. 8 Bnutson( /.A. 1991#( =he rationalit3 of doing nothing: Auditors res"onses to legal
lia,ilit3 in an institutionali?ed en2iron0ent( )ritical *erspecti(es on !ccounting, 2( "". 2)1-226.
Daa( J.+. 1991#( =he e9"ectation ga0e: Regulation of auditors ,3 go2ern0ent and the "rofession( )ritical
*erspecti(es on !ccounting( 2( "". $*-1)7.
Da3( D. 8 Shelluch( !. 199*#( =he i0"act of the ;ongfor0 audit re"ort on users@ "erce"tion of the auditor@s role( +he
!ustralian !ccounting %e(iew, 'ol. *( No2e0,er( "". 1-11.
Dloe-( J./. 8 Jager( I. 199*#( +he audit expectation gap in the %epublic of ,outh !frica, Cor-ing !a"er( School of
Accountanc3( 1ni2ersit3 of !retoria( South Africa.
Dra0ling( A.A.( 8 Schat?,erg( J.C. 1996#( =he role of undergraduate auditing coursewor- in reducing the
e9"ectation ga"( "ssues in !ccounting -ducation( 'ol. 11( No. 1( "". 1*1-6).
Iartherl3( /.J. Innes( J. 8 4rown( =.A. 1991#( E=he e9"anded audit re"ort R an e0"irical in2estigation( !ccounting
and #usiness %esearch, 'ol. 21( Autu0n( "". *11-19.
Iian( +.B. 2)))#( =he audit e9"ectation ga" in Singa"ore: An e0"irical stud3 of co0"an3 audit o,;ecti2es( Asian
Re2iew of Accounting( 'ol. $( No. 1( "". $*-1)6.
Ioo-s( B.A. 1991#( !rofessionalis0 and self interest: A critical 2iew of the e9"ectation ga"( )ritical *erspecti(es on
!ccounting, *( "". 1)9-1*6.
Iudia,( 5. 2))2#( An e0"irical in2estigation of audit "erce"tion ga" in Saudi Ara,ia( a2aila,le at
www.e9.ac.1BQr,"QresearchQdiscussion"a"ers AccFinQAccFin 2))2.2iewed $th August( 2)11.
Iu0"hre3( +.D.( 5oi?er( !. 8 =urle3( C.S. 199*#( =he audit e9"ectation ga" in 4ritain: An e0"irical in2estigation(
!ccounting and #usiness %esearch, 'ol. 2*( su00er( "". *96-%11.
Jennings( 5.5.( Rec-ers( !.5.J 8 Bneer( /.+. 1991#( =he Auditors dile00a: =he incongruous ;udicial notions of
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

%9

auditing "rofession and actual audit "ractice( !merican #usiness .aw $ournal( 'ol. 29( s"ring( "". 99-126.
Bnutson( !.I. 199%#( In the "u,lic interest R is it enoughT()*! $ournal( 'ol. 6%( Januar3( "". *2-%.
Boh( I. 8 Coo( 7. 199$#( =he e9"ectation ga" in auditing( 'anagerial !uditing $ournal, 'ol. 1*( "". 1%7-16%.
A2aila,le at htt":QQwww.rac-ers"el.seQ u"load-filesQ!1%7."df 2iewed 1)th August( 2)11.
Aee( =.A. 197)#( =he nature of auditing and its o,;ecti2es( !ccountancy( $1 92)#( "". 292-296.
Aee( =.I. 8 A?ha0( 5.A. 2))$#( =he audit e9"ectation ga": A re2iew of contri,uting factors. $ournal of 'odern
!ccounting and !uditing( 'ol. %( No. $ *9#( *)-*6 Aug.
Aee( =.IG A?ha0( 5d. Ali 8 Bandasa03( S. 2))$#( =owards reducing the audit e9"ectation ga": !ossi,le 0issionT
!ccountants +oday( "". 1$-22( Fe,. A2aila,le at: htt":QQwww.0ia.org.03QatQatQ2))$)2Q)6."df. 'iewed $th August(
2)11.
Aeung( !.( +ora0( !.( +oo"er( 4.( +osserat( D. 8 Dill( D. 2))%#( 5odern auditing assurance ser2ice. Australia: John
Cile3 8 Sons( 2nd 7dition.
Aiggio( +./. 197%#( =he e9"ectation ga": the accountant@s waterloo( $ournal of )ontemporary #usiness( 'ol. *(
S"ring( "". 27-%%.
Ai0"erg( =. 19*2( 19**#( +he social responsibility of the auditor, re"roduced in Ai0"ergInstituut( 19$6#( Ai0"erg
Institute( =he Netherlands.
Ain( P. and +hen( J. 2))%#( Auditors res"onsi,ilit3 and inde"endence: 72idence fro0 +hina( Research in
Accounting Regulation( 'ol. 17.
Aow( A.5. 19$)#( =he auditor@s detection res"onsi,ilit3: Is there an e9"ected ga"T Journal of Accountanc3( 'ol. 16)(
&cto,er( "". 66-7).
Aow( A.5.( Foo( S.A. 8 Boh( I.+. 19$$#( =he e9"ectation ga" ,etween financial anal3sts and auditors R So0e
e0"irical e2idence( ,ingapore !ccountant, 'ol. %( 5a3( "". 1)-1*.
Aowe( /.J. 199%#( =he e9"ectation ga" in the legal s3ste0: !erce"tion difference ,etween auditors and ;udges.
$ournal of !pplied #usiness %esearch, 'ol. 1)( su00er( "". *9-%%.
5accarrone( 7.=. 199*#( 1sing the e9"ectation ga" to close the legal ga"( )*! $ournal, 'ol. 6*( 0arch( "". 1)-16.
5artinis /e 5.( Bi0( 7G 8A03 A.( 2)))#( An e9a0ination of the audit e9"ectation ga" in Singa"ore( !sian %e(iew
of !ccounting( 'ol. $( No. 1( "". 69-$2.
5c7nroe( J.7.( 8 5artens( S.+. 2))1#( Auditors@ and in2estors@ "erce"tion of the e9"ectation ga" !ccounting
Hori/ons( 'ol. 16( No. %( /ec.( "". *%6-*6$.
5cInnes( C.5. 199%#( =he audit e9"ectation ga" in the Re"u,lic of South Africa( !ccounting and #usiness
%esearch( 'ol. 2%( Su00er.
5onroe( D.S. 8 Coodliff( /.R. 199%#( An e0"irical in2estigation of the audit e9"ectation ga": Australia e2idence
!ccounting and &inance( 'ol. *%( 5a3( "". %7-7%.
5ur"h3( !. 8 5a3nard( 5. A. 1996# ( 1sing ;udge0ent "rofiles to co0"are ad2ertising agencies@ and clints@
ca0"aign 2alues( Journal of Ad2ertising Research( 'ol *6( No 2( 19-27.
Nair( R. 8 Ritten,erg( A. 19$7#( 5essages "ercei2ed fro0 audit( re2iew( and co0"ilation re"orts: e9tension to 0ore
di2erse grou"s( !uditing, a $ournal of *ractice and +heory( 'ol. 7( Fall( "". 16-*$.
Noordin( I./. 1999#( =he e9istence of e9"ectation ga" and the usefulness of auditors re"ort. A2aila,le at:
htt":QQwww.alrinhan.co0QthisisQac-.sta. 'iewed 1)th August( 2)11.
&@5alle3( S.F. 199*#( Aegal lia,ilit3 is ha2ing a chilling effect on the auditor@s role( !ccounting Hori/ons, 'ol. 7(
June( "". $2-7.
&-aro( S. +. 2))9#( 4ridging the audit e9"ectation ga": =he "erce"tion of I+AN 0e0,ers( 1n"u,lished 5.Sc
research "ro;ect( su,0itted to the /e"art0ent of Accountanc3( 1ni2ersit3 of Nigeria( 7nugu ca0"us. A2aila,le at
htt":QQssrn.co0Qa,stractN17*)7)6.
!orter( 4. 199*#( An e0"irical stud3 of the audit e9"ectation-"erfor0ance ga"( Accounting and 4usiness Research(
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

6)

'ol. 2%(No .9* (Cinter( "". %9-6$.
!orter( 4. 8 Dowthor"e( +. 2))%#( =he audit e9"ectation-"erfor0ance ga" in the 1nited Bingdo0 in 1999 and
co0"arison with the ga" in New Pealand in 19$9 and in 1999( Scotland: =he Institute of +hartered Accountants of
Scotland. A2aila,le at htt":QQwww.icas-org.u-QsiteQc0sQdownloadQres-"orta 2iewed 1)th August( 2)11.
!ur2is( +. 19$7#( =he I0"act of docu0entation for0at on auditors@ "reli0inar3 e2aluation of internal accounting
control( 0orking *aper( +entre of Accounting Research( 1ni2ersit3 of Southern +alifornia.
Ra,inowit?( A.5. 1996#( Re,uilding "u,lic confidence in auditors and organi?ational controls( )*! $ournal( 'ol. 66(
Januar3( "". *)-%.
Salehi( 5. 8 Rosta0i( '. 2))9#( Audit e9"ectation ga": International e2idences( "nternational $ournal of !cademic
%esearch( 'ol. 1( Se"te0,er( "". 1%)-1%6. A2aila,le at: htt":QQwww.i;ar.lit.a?Q"dfQ1Q2))91-2#."df. 'iewed 1)th
August( 2)11.
Siddi>ui( J.( 8 Nasreen( =. 2))%#( Audit e9"ectation ga" in 4angladesh: !erce"tual differences ,etween accounting
"rofessionals and students( June( htt":QQssrn.co0Qa,stractN6676%2
Si--a !( !u9t3( A.( Cill0ott( I. 8 +oo"er( +. 199$#( =he i0"ossi,ilit3 of eli0inating the e9"ectations ga": So0e
theor3 and e2idence@( +ritical !ers"ecti2es on Accounting, 9( "". 299-**).
=rauth( 7. 5.( Farwell( /.C. 8 Aee( /.199*#( =he IS e9"ectation ga": Industr3 e9"ectations 2ersus acade0ic
"re"aration( 5IS Uuarterl3( 'ol.17( No. *( %7-72.

AN&'A R7S1A= FR&5 S!SS16.)
Su0 of S>uares df 5ean S>uare F Sig.
!14BR! 4etween Drou"s 62*.*$* 1 62*.*$* 16.1*7 .)))
Cithin Drou"s 2961.621 91 *2.%*%
=otal *%7%.9)* 92

!7A1/!R 4etween Drou"s 21*2.%61 1 21*2.%61 6%.692 .)))
Cithin Drou"s *66%.6$1 91 *9.)61
=otal 66$7.)*2 92

R7DR7SSI&N R7S1A= FR&5 S!SS 16.)
/e"endent 'aria,le: A1/7MDA!
5ethod: 5A - 4inar3 Aogit
/ate: )6Q)$Q12 =i0e: 2):27
Sa0"lead;usted#: 1 9*
Included o,ser2ations: 9* after ad;usting end"oints
+on2ergence achie2ed after $ iterations
+o2ariance 0atri9 co0"uted using second deri2ati2es
'aria,le +oefficient Std. 7rror ?-Statistic !ro,.
!14BR!! 1.)6)619 ).*2)619 *.*)9)67 ).)))9
A1/!7RRS -).2*9$*1 ).12)7$% -1.9$6612 ).)%71
!7A1/!R ).$97611 ).2$6*21 *.1%6616 ).))17
+ -*7.*6$6$ 12.7161$ -2.9*$$96 ).))**
Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

61














5ean de"endent 2ar ).7$%9%6 S./. de"endent 2ar ).%1*)$7
S.7. of regression ).19%)6* A-ai-e info criterion ).*)9*76
Su0 s>uared resid *.*61%%7 Schwar? criterion ).%1$*)%
Aog li-elihood -1).*$69% Iannan-Uuinn criter. ).*6**6$
Restr. log li-elihood -%$.%1*67 A2g. log li-elihood -).111677
AR statistic * df# 76.)6626 5cFadden R-s>uared ).7$6%76
!ro,a,ilit3AR stat# 2.227-16
&,s with /e"N) 2) =otal o,s 9*
&,s with /e"N1 7*

Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline#
'ol.%( No.2( 2)1*

62


























Dependent Variable: AUDEXGAP
Method: ML - Binary Probit
Date: 05/08/! "i#e: !0:$
%a#ple&ad'()ted*: +,
-n.l(ded ob)er/ation): +, a0ter ad'()tin1 endpoint)
2on/er1en.e a.hie/ed a0ter 8 iteration)
2o/arian.e #atri3 .o#p(ted ()in1 )e.ond deri/ati/e)
Variable 2oe00i.ient %td4 Error 5-%tati)ti. Prob4
PUB67PP 04$088$, 049!!85 ,450+,!8 040008
AUDPE77% -04,8+85 040$595 -!4+559 040!88
PEAUDP7 04508++8 0450+08 ,4,9!++$ 040009
2 -!4,,+$ $488$5 -,4,!+, 0400+
Mean dependent /ar 04988+8$ %4D4 dependent /ar 048,089
%4E4 o0 re1re))ion 04+,,!8 A:ai:e in0o .riterion 04,08!!
%(# );(ared re)id ,4,!$850 %.h<ar5 .riterion 048,50
Lo1 li:elihood -048$!8 =annan->(inn .riter4 04,88!08
7e)tr4 lo1 li:elihood -8848,59 A/14 lo1 li:elihood -040+00
L7 )tati)ti. &, d0* 9$45,859 M.?adden 7-);(ared 049+08!5
Probability&L7 )tat* !4!!E-$
@b) <ith DepA0 !0 "otal ob) +,
@b) <ith DepA 9,






This academic article was published by The International Institute for Science,
Technology and Education (IISTE). The IISTE is a pioneer in the Open Access
Publishing service based in the U.S. and Europe. The aim of the institute is
Accelerating Global Knowledge Sharing.

More information about the publisher can be found in the IISTEs homepage:
http://www.iiste.org

CALL FOR PAPERS
The IISTE is currently hosting more than 30 peer-reviewed academic journals and
collaborating with academic institutions around the world. Theres no deadline for
submission. Prospective authors of IISTE journals can find the submission
instruction on the following page: http://www.iiste.org/Journals/
The IISTE editorial team promises to the review and publish all the qualified
submissions in a fast manner. All the journals articles are available online to the
readers all over the world without financial, legal, or technical barriers other than
those inseparable from gaining access to the internet itself. Printed version of the
journals is also available upon request of readers and authors.
IISTE Knowledge Sharing Partners
EBSCO, Index Copernicus, Ulrich's Periodicals Directory, JournalTOCS, PKP Open
Archives Harvester, Bielefeld Academic Search Engine, Elektronische
Zeitschriftenbibliothek EZB, Open J-Gate, OCLC WorldCat, Universe Digtial
Library , NewJour, Google Scholar