Doctoral thesis, University of Huddersfield. PDF - Accepted Version Download 3MB Abstract Auditing has grown considerably recently but this growth has not been impeded by steady criticism, misgivings and discussions concerning the worth of the auditing function and audit report communication. A great deal of such criticism and discussion typically emerge following major financial scandals and company collapses such as the crash of Enron, Arthur Andersen, not only in countries that suffered from such corporate collapses, but also in countries that have never experienced such crises. The main aim of carrying out this research study is to explore and examine the development and current state of auditing in Libya, and the possible existence of an expectation gap in auditing in economic transition conditions in one of the less developed countries, namely Libya.
According to the the American Institute of Certified Public Accountants AICPA inthe expectation gap could be defined as "the difference between what the public and financial statement users believe auditors are responsible for and what auditors themselves believe their responsibilities are.
History InLiggio is the first to define the expectation gap as the difference between the actual and the expected performance.
This definition is extended by the Cohen Commission on auditors responsibilities inwhere the expectation gap is represented by the gap between the public expectations and needs, and the expected accomplishment of the auditors.
Porter in defined the 'expectation-performance gap' as the gap between the expectations of society about auditors and the performance of auditors. Example Regulators and standard setters usually propose a change in regulation following a particular event.
Recently, the financial crisis was the trigger for regulators and standard setters to revisit the audit report e. While narrowing the audit expectation gap has been the main objective of previous changes to the audit report e.The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectations from the public, the lower is the credibility, earning potential and prestige associated with the work of auditors.
THE EXISTENCE OF AUDIT EXPECTATION GAP IN MALAYSIA 91 investment analysts, loan officers and financial journalists confirms the presence of an expectation gap in the UK on the nature of audit functions and perceived performance of.
The existence of an audit expectation gap is likely to be detrimental to the value of auditing and the well-being of the audit profession as the contribution of auditing may not be fully recognised by society.
The existence of an audit expectation gap implies that the auditees and audit beneficiaries are dissatisfied with the performance of auditors. Asien . As explained in the IAASB consultation paper (), the expectation gap relates to the "difference between what users expect from the auditor and the financial statement audit, and the reality of what an audit is”, while the information gap relates to “the existence of a gap between the information they [users] believe is needed to make.
The ‘audit expectation gap’ is the term used to describe the variance between what the users of financial statements ‘believe auditors do (or ought to do) and what the auditors actually do’ (Cooke, ).