Audit expectations gap and corporate fraud: Empirical evidence from Iran

Abstract

The purpose of this study was to investigate the existence of the audit expectations gap concerning auditors' responsibilities for preventing and detecting fraud among auditors, financial managers and investors. The survey instrument was a questionnaire used in Hassink et al. (2009) with minor modifications, according to auditing standards and auditing profession in Iran. The questionnaire consisted of 34 statements, which was divided into four groups: fraud definition (Questions 1 to 10), auditors' responsibility for detecting fraud (Questions 11 to 22), auditors' responsibility for further investigating suspicions of fraud (Questions 23 to 28), and reporting detected fraud to the supervisory board and society (Questions 29 to 34). Questionnaires were distributed among respondents. Finally, 147 questionnaires were collected. The significance of the gaps was measured using Independent-sample t-tests. The survey results provided evidence of an audit expectations gap among three groups of respondents regarding auditors' responsibilities for preventing and detecting fraud. Key words: Audit expectations gap, fraud, auditors, business managers, investors, auditing standards.