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An empirical study of audit expectation-performance gap: The case of Libya

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  • Masoud, Najeb

Abstract

The purpose of this research is to empirically examine the causes of the audit expectation gap in Libya. The study builds on the frameworks developed by Porter (1993) and Porter & Gowthorpe (2004) to investigate the influence of the audit expectation gap to the auditing profession in the case of Libya. The data was collected through a questionnaire survey randomly selected members of four broad interest groups including auditors, auditees and audit beneficiaries both inside and outside the financial community were followed by in-depth interviews. A total of 988 questionnaires were distributed from which 431 questionnaires with usable responses were received from four groups. The overall usable response rate was 44%, ranging from 47% for the financial community audit beneficiaries to 41% for the auditors group. The findings of the study revealed that there exists audit expectation-performance gap and that the gap is as result of the following factors in different levels of percentages. Deficiency standards and deficient performance gaps constitute 49% and 15%, respectively, of the audit expectation-performance gap. The audit expectation-performance gap derives from society having unreasonable expectations of auditor’s significant proportion 36% of the gap. As result of the following interviews demonstrated that the objectives of auditing are not as clear to the financial statement users as they are to the auditors and the financial statement preparers in Libyan business environment. Further, we observe that reducing the expectations gap is to improve knowledge responsibilities between the auditors and user groups and understanding of the auditor’s role and responsibilities through the provision of auditing illegal acts.

Suggested Citation

  • Masoud, Najeb, 2017. "An empirical study of audit expectation-performance gap: The case of Libya," Research in International Business and Finance, Elsevier, vol. 41(C), pages 1-15.
    • Handle: RePEc:eee:riibaf:v:41:y:2017:i:c:p:1-15
    DOI: 10.1016/j.ribaf.2017.04.012
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    References listed on IDEAS

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    1. Yusuf Munir Sidani, 2007. "The audit expectation gap: evidence from Lebanon," Managerial Auditing Journal, Emerald Group Publishing, vol. 22(3), pages 288-302, March.
    2. Ritchie, Bob & Khorwatt, Esamaddin, 2007. "The attitude of Libyan auditors to inherent control risk assessment," The British Accounting Review, Elsevier, vol. 39(1), pages 39-59.
    3. Amirhossein Taebi Noghondari & Soon Yau Foong, 2009. "Audit expectation gap and loan decision performance of bank officers in Iran," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 5(3), pages 310-328.
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    5. Ali, Azham & Lee, Teck Heang & Yusof, Nor Zalina & Ojo, Marianne, 2008. "Practical training and the audit expectations gap: The case of accounting undergraduates of Universiti Utara Malaysia," MPRA Paper 21525, University Library of Munich, Germany.
    6. Libby, R, 1979. "Bankers And Auditors Perceptions Of The Message Communicated By The Audit Report," Journal of Accounting Research, Wiley Blackwell, vol. 17(1), pages 99-122.
    7. Mohamed Zakari & Karim Menacere, 2012. "The challenges of the quality of audit evidence in Libya," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 1(1), pages 3-24.
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    11. Peter Schelluch & Grant Gay, 2006. "Assurance provided by auditors’ reports on prospective financial information: implications for the expectation gap," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(4), pages 653-676, December.
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    Cited by:

    1. Hassan Mansur & Anita Tangl, Dr. Prof., 2018. "How to Bridge the Audit Expectation Gap?," Journal of Social Sciences (COES&RJ-JSS), , vol. 7(2), pages 61-73, April.
    2. Hasan Mansur & Anita Tangl, 2018. "The Perceptions of Credit Officers towards External Auditors: A Case Study from Jordan," Accounting and Finance Research, Sciedu Press, vol. 7(1), pages 237-237, February.

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    More about this item

    Keywords

    Audit expectation-performance gap; Auditors; Auditees; Audit beneficiaries; Libya;
    All these keywords.

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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