Accounting & Finance - Auditing Question 5: Discuss the audit expectation gap. Your answer should include the following: the main causes of the expectation gap; its main components; and procedures that can be taken to reduce the expectation gap
Accounting & Finance - Auditing Question 5: Discuss the audit expectation gap. Your answer should include the following: the main causes of the expectation gap; its main components; and procedures that can be taken to reduce the expectation gap
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter17: Other Services Provided By Audit Firms
Section: Chapter Questions
Problem 26MCQ
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Accounting & Finance - Auditing
Question 5:
Discuss the audit expectation gap. Your answer should include the following: the main causes of the expectation gap; its main components; and procedures that can be taken to reduce the expectation gap.
Expert Solution
Step 1
The expectation gap is the dissimilarity among the actual and real roles and responsibilities of auditors and the expectations or viewpoint of general users of financial statements of responsibilities of the audit while performing the audit.
Following are the main causes of the expectation gap-
- the auditor is not certified to provide the service of audit
- absence of sufficient standards
- misinterpretation of users
- dependency and self-interest of auditor
- lack of knowledge of responsibilities of auditors
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