Describe the Components of the Audit Expectation Gap

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The Answer is The audit expectation gap is the difference between the expectations of financial statement users and the service that is actually provided by the auditor. This gap is partly due to the unreasonable expectations of users. Users expect auditors to provide assurance concerning material fraud, irregularities and the viability of the business and its management. However, auditors cannot provide absolute assurance due to the limitations of financial reporting and the auditing process. This is why only reasonable or limited assurance is given. Users that expect auditors to provide absolute assurance are exhibiting unreasonable expectations. The result is that auditors who are performing above the approved standards are still perceived as performing inadequately.
The audit expectation gap can also be partly attributed to inadequate performance by auditors. The recent reforms aimed at improving audit quality and auditor independence should reduce this part of the gap.

Describe the Components of the Audit Expectation Gap

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Describe the Components of the Audit Expectation Gap

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Correct Answer:
Verified