EXPECTATION GAP

Expectation Gap

Expectation Gap

Introduction

Expectation gap is the gap between what users expect from the accounts of the auditor and that it considers should be given the legal definition of its responsibilities and resources at its disposal to fulfill its mission. The audit expectation gap has been affecting professionals in the industry for many years. They are responsible for the atmosphere of criticism and litigation, moved by the courts, by politicians, by the media and by society against auditors related everything about their quality and performance. As is well recognized by Pickett (2005), between users of financial information is a widespread view that anyone who has a particular interest in a company should be able to rely on the audited accounts as collateral solvency and viability of the same. For this reason, to gain public knowledge, without any warning, the fact that a company is in serious financial difficulties, it has been witnessed that an immediate attempt to regain responsibility for this situation is a person known as an auditor.

Although not a recent issue, differences in expectations have occupied, increasingly, a top place in the debate on the future of audit and its role in society. Successive and financial scandals such as, Enron, WorldCom, Xerox, Parmalat, among others, have ravaged the capital market and society, and have reinforced the public the idea that the audit is not meeting expectations society. Indeed, this issue is becoming a threat and making audit professionals in a very vulnerable target, to the extreme of putting into question their role in society. Society needs to have confidence in the quality, integrity and reliability of financial information disclosed by managers and directors of companies and is, for this purpose, so the auditors are entrusted with the task of verifying whether this information is accurately reflect an accurate picture of the company.

Thesis Statement

The role of internal and external auditors will play a major role in the reduction of the auditing expectation gap.

Discussion

The debate on the expectation gap actually covers two aspects:

The first concerns the role of the auditor and how it is understood by the users of its work. One of the most sensitive issues is the identification of fraud. The investor believes that the auditor should systematically not simply seek to denounce when he has knowledge. In fact, the regulation imposes to bring to the attention of the audit committee weaknesses in internal control when these procedures are related to the preparation and processing of financial and accounting information (www.nysscpa.org).

The second aspect of the expectation gap concerns to the adaptation of the information provided to investors' needs. This is a question that is much more important. The accounting and financial information allows it to properly inform its recipients and to enable them to make decisions of investment or divestment knowingly. It is obvious that the answer cannot be positive.

Expectation Gap

The industry is faced with profound changes in its context and the changes in its role within the corporate governance, auditing is not meeting the expectations of its ...