Abstract
The goal of this study is to determine the variable(s) that is/are sources of audit expectation gap between auditors and individual investors (i.e., financial statement users) in Bangladesh. The variables used are Internal Control, Fraud Detection, Appropriateness in using accounting numbers and lastly Reliability. In this research the sample size was selected purposively, a total of 30 auditors were selected from different audit firms in terms of firm’s size, revenue, and practices again a total of 30 investors were selected purposively. A structured format of questionnaire was used where the response options were predetermined to acquire information directly from auditors and investors. The questionnaires consist of two sections, first section collected demographic data and second section enclosed 12 semantic differential belief statements. Same questionnaire was given to two independent sample groups (auditors and investors) to identify expectation gaps. To identify the variable(s) that are the cause of the audit expectation gap, the statistical approach “Independent sample t-test” was used. The disparity between auditor and investor in two variables, internal control, and reliability, is discovered in this study. The reasons behind these gaps are lack of proper educational practices and lack of understanding regarding audit norms and practices. These gaps can be reduced by giving adequate knowledge, awareness, and fair practices by the auditors to the financial users.
Highlights
IntroductionIn any country the auditing ‘expectation gap’ is a significant content for both investors and auditors
The purpose of this study is to explore the factors that cause an audit expectation gap between auditors and individual investors
It is possible to conclude from the overall data that there is an expectation gap between auditors and individual investors in terms of internal control and reliability
Summary
In any country the auditing ‘expectation gap’ is a significant content for both investors and auditors. Auditors are independent certified public accountants who examine the company’s financial statements that a company’s management team has prepared. Auditors acquire an understanding of the company’s internal controls and put “auditing procedures,” which include inspection of the company’s different books and records, observations, inquiries, and confirmations. The auditors' job is to convey their thoughts on the fairness with which they report the financial situation, results of various operations, and cash flows in accordance with generally accepted accounting rules in all material ways. Investors’ expectations are the perception about what auditors should do when performing their audit responsibilities. An audit provides the public with additional confidence and promises beyond managements’ own assertions that a company’s financial statements can be relied on which is an important implication for investors in making investment decisions
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