Professional Documents
Culture Documents
1.0
Introduction
1.1
Accounting Vs Auditing
2.0
Part I
2.1
2.2
3.0
Part II
3.1
Evidence Of Audit Expectation
Gap: By Countries
4.0
Part III
4.1
Conclusion & Recommendation
5.0
Q&A
ACCOUNTING
1.Keep track of transactions
2. Information provisioning through
financial reporting to end -users
Year 1853
Beginning Audit
- Latin word audire
- To hear and hearere
Year 1990s
Now
-Fraud
detection
- Determine
fairness of
in financial
reporting
- Separation of
ownership &
management
coupled with the
complexity of
companies with
several financial
scandals
AUDIT WORK
SUBSTANTIVE
TESTING
Expectation gap
arise from users
misunderstandings
of the role,
objectives and
limitation of an
audit, inadequate
audit standards and
deficient auditor
performance
capture the main
essence of its
causes.
Raise issues
Central issues relates to its are fraud detection,
auditor independence, public interest reporting
and the meaning of audit reports.
PART 2
Evidence Of Audit Expectation Gap
; By Countries
UNITED STATES
AUTHOR
SAMPLE
OBJECTIVE
Baron et al.,
(1977)
1) Auditors
2) users of
accounting
reports
(financial
analysts,
bank loan
officers and
corporate
financial
managers)
FINDINGS
AUSTRALIA
AUTHOR
Low (1980)
1)
2)
SAMPLE
OBJECTIVE
FINDINGS
Auditors
nonauditor
both
groups
differed
significantly
in
their
perceptions of the extent of
auditors
detection
and
disclosure responsibilities and
that an expectation gap
existed between the two
groups
consistent with that of Beck
(1974) - shareholders had
higher expectations of auditors
than what most auditors would
consider reasonable.
SINGAPORE
AUTHOR
Low et al.,
(1988)
SAMPLE
1)
2)
Auditors
financial
Analysts
OBJECTIVE
FINDINGS
SINGAPORE
AUTHOR
Best et al.,
(1999)
SAMPLE
1)
2)
3)
Auditors
Bankers
Investors
OBJECTIVE
FINDINGS
Hian (2000)
1)
2)
Auditors
Non
auditors
to
examine
if
an
audit audit expectation gap exists
expectation gap with respect to
the objectives of a company The non-auditors place a
audit
significantly greater demand
on audits
UNITED KINGDOM
AUTHOR
SAMPLE
OBJECTIVE
FINDINGS
Humphrey et
al., (1993)
1) Auditors
2) Users of
financial
statement
AUTHOR
Cameron
(1993)
SAMPLE
1) public
accounta
nts
2) small
business
and
associated
third
parties
(bankers,
business
consultant
and
enterprise
agencies)
NEW ZEALAND
OBJECTIVE
explored
the
relationship
between public accountants
and their small business clients in
New Zealand
FINDINGS
the three groups expected
auditors to:
1) provide compliance services,
give
accounting-related advice
2) show concern for clients
financial health
3) actively seek out client
problems and give general
business advice.
Auditors were not expected to
actively seeking out client
problems.
Result: the actual performance
of chartered accountants was
generally perceived to fall
below the expected levels.
SAUDI ARABIA
AUTHOR
Hudaib,M (2002)
An empirical
Investigation of
Audit Perceptions
Gap in Saudi
Arabia
www.ex.ac.uk/rbp
/research
/discussion papers
AccFin/AccFin2002
.
SAMPLE
FINDINGS
MALAYSIA
AUTHOR
Fadzly, M.Z.,
and Ahmad,
Z (2004)
Audit
Expectation
Gap: The
case of
Malaysia
Managerial
Auditing
Journal,
Volume 19,
No. 7, pp.
897-915.
METHOD
SAMPLE
FINDINGS
NO SIGNIFICANT differences in
students
and
auditors
expectations.
wider expectation gap on the
issue
of
the
auditors
responsibility
and
lesser
expectation gap with respect
to reliability and usefulness of
audit.
REPUBLIC OF CHINA
AUTHOR
`Jun, Z. Lin (2004)
Auditors
Responsibility
and
Independence:
Evidence from
China
Research in
Accounting
Regulation, Vol.
17.
SAMPLE
1)
2)
Questionnaires
24.80%
respond from
audit
beneficiaries
(investors,
creditors,
government
officials,
business
management,
and
academics)
and
public
practitioners
OBJECTIVE
FINDINGS
EGYPT
AUTHOR
Dixon, R., M.
Woodhead,
and Sohliman,
M (2006)
An
Investigation
of the
Expectation
Gap in Egypt
Managerial
Auditing
Journal, Vol.
21, No. 3,pp.
293-302.
SAMPLE
1) Questionnaire
-demographic
factors
-16 statements
under 3 factors
(responsibility,
reliability and
decision usefulness)
OBJECTIVES
FINDINGS
the
existence
of
an
expectation gap in the
nature
of
the
audit
function, the perceived
performance of auditors,
their duties and role, their
independence and the
non-audit services.
BANGLADESH
AUTHOR
SAMPLE
1) professional
accountants
2) university
accounting
students
Audit
Expectations
Gap in
Bangladesh:
Perceptual
Differences
Between
Accounting
Professionals and
Students
http://sssm.com/
abstract=557542.
METHODOLOGY
Questionnaires
i. audit responsibility,
ii. audit reliability
iii. decision usefulness of
audited financial statements.
FINDINGS
the existence of a much wider
expectation
gap
between
auditors and other societal
groups in Bangladesh, as these
clusters possess lesser knowledge
in auditing than the students of
accounting.
CONCLUSION
Auditor should NOT ONLY provide an audit opinion, but also
INTERPRET THE FINANCIAL STATEMENTS in such a manner that they
could evaluate whether to invest in the entity or not.
to perform some of the audit procedures while performing the
attest function like penetrating into company affairs, engaging
in management surveillance and detecting illegal acts and/or
fraud on the part of management.
High expectations from user and gap arises because: OVER-EXPECTATIONS -regarding the functions of an auditor
LACK OF KNOWLEDGE about auditors role and responsibilities
RECOMMENDATION
Continued and strengthened monitoring of auditors
performance
Improving the quality control in audit firms
Enhancing the education of auditing practitioners