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Eliminating the Audit Expectations Gap : Myth or Reality?

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  • Ojo, Marianne

Abstract

The audit expectations gap is of serious concern to the UK accounting profession with the Department of Trade and Industry proposing a new framework for independent regulation of the accounting profession. However the new Accounting Foundation has had its role placed under review following the Enron collapse and introduction of the Sarbanes-Oxley Act 2002. This resulted in responsibility for independent regulation of the accounting profession being transferred to the reconstituted Financial Reporting Council. High profile failure of financial services firms, commencing with the secondary banking crisis in the 1970s, followed by collapses of banks such as Johnson Matthey Bankers ( JMB), Bank of Credit and Commerce International (BCCI) and Barings, building societies such as Grays and insurers such as the recent problems at Equitable Life and Independent Insurance have given rise to further debate on the audit expectations gap. The debate surrounding the “expectations gap” often revolves around whether such a gap can be eliminated. Sikka, Puxty, Cooper and Wilmott argue that within a social context, the expectations gap will be difficult to eliminate due to social conflict and the fact that the meaning of social practices is always subject to challenges. It will however, be argued that even though the whole component definition of an audit may be subject to changes and challenges and therefore cannot be objective, elements within the definition of an audit and in particular, the fraud and error detection role of an audit can be relatively objective.

Suggested Citation

  • Ojo, Marianne, 2006. "Eliminating the Audit Expectations Gap : Myth or Reality?," MPRA Paper 232, University Library of Munich, Germany, revised Sep 2006.
  • Handle: RePEc:pra:mprapa:232
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    File URL: https://mpra.ub.uni-muenchen.de/232/1/MPRA_paper_232.pdf
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    Cited by:

    1. Philip Reckers & Marianne Jennings & D. Jordan Lowe & Kurt Pany, 2007. "Judges' Attitudes toward the Public Accounting Profession," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 625-645.
    2. Saher Aqel, 2011. "Auditors’ Assessments of Materiality Between Professional Judgment and Subjectivity," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 4(4), pages 72-88, August.
    3. DiGabriele, Jim & Ojo, Marianne, 2017. "The efficiency wage hypothesis and the role of corporate governance in firm performance," MPRA Paper 80710, University Library of Munich, Germany.

    More about this item

    Keywords

    Expectations; gap; audit;

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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