Abstract
AbstractThe audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectation from the public, the lower the credibility earning potential and prestige associated with the work of auditors. The study examined the level and nature of expectation gap (performance gap) between auditors and users of financial statements. It sought to establish whether or not there are differences between users of financial statements and auditors’ perception of management responsibility for the preparation of financial statements, its reliability and decision usefulness. Chi-square (c2) was used to analyze the data obtained from the study. The data were obtained through questionnaire. Two hundred and fifty (250) copies of the instrument were distributed using purposive sampling technique. In this study, a cross-sectional survey was conducted to capture the perceptions of users of financial statements in Nigeria. The tests of hypothesis were done using Statistical Package for Social Science (SPSS) version 14.0. Tests were carried out at a significant level of 5% and four degree of freedom. The findings of this study indicated that there is a wide expectation gap in the areas of auditors responsibility for fraud prevention and detection. There is no generally accepted description of the role of the auditor. Audit scandals had negative impact on auditor’s credibility. We recommend that users of financial statements should be enlightened more on the responsibilities of auditors on the financial statements, the role of the auditor should be clarified and quality control measures should be observed in audit firms.Key words: Auditing, Audit Performance gap, Users of Financial Statements, perceptions
Highlights
Researchers and the accounting profession have responded in different ways to the audit expectation gap
It must be noted that the expectation gap arises from a combination of excessive expectations and insufficient performance.The audit expectation gap is detrimental to the auditing profession as it has negative influences on the value of auditing and the regulation of auditors in the modern society.We established that if auditors are to retain the public’s perception of them as providing a valuable service in society, the gap between the public’s expectations of auditors’ performance must be narrowed
Users of Financial Statements should be Enlightened More on the Responsibilities of Auditors on the Financial Statement: Formal education of users appears to be a potential tool for reducing the gap, as no significant differences were find between the responses of directors who have had some relevant education
Summary
Asien (2007) argued that the unqualified audit opinion is wrongly seen as a certification that the firm is solvent, liquid and has the capacity to adopt to the dynamics of the environment which continuity of existence implies. This lack of understanding on the part of the public makes it difficult for them to know who has responsibility for financial statements preparation and the continued existence of the enterprise. Owen (2005:35) defined audit expectation gap as “the gap between the role of an auditor, as perceived by the auditor and the expectations of the users of financial statements. The expectation gap occurs when there are differences between what the public expects from the auditor and what auditor provides
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