Abstract
The audit ‘expectation gap’ is a crucial issue associated with the independent auditing function and has significant implications on the development of auditing standards and practices. Through a questionnaire survey, this study investigated the rise of ‘expectation gap’ and related auditing issues under business and auditing environment in the People's Republic of China. The results reveal that the role and benefits of public accounting (independent auditing) had been positively recognized by Chinese audit beneficiaries and auditors, and there were increasing demands for expanding the applicability of public accounting. This study obtained substantial evidence on the emergence of audit ‘expectation gap’ in China, with respect to audit objectives, auditor's obligation to detect and report fraud, auditor independence, and third party liability of auditors. The causes and practical implications of the ‘expectation gap’ are therefore analyzed contextual to the present practices of public accounting in changing Chinese social and economic conditions. This study should cast light on understanding of the institutional setting and recent development of independent audits in China.
Published Version
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