CHAPTER ONE
1.1 Background of the study
Audit expectation gap can be defined as the distinction between the actual and expected responsiblity of an auditor. According to the American Institute of Certified Public Accountants (AICPA) in 1992, the expectation gap could be defined as "the differentiation between what the public and users of financial statements believe auditors are responsible for and what auditors themselves believe their responsibilities are.
In 1974, Liggio describe the expectation gap as the difference between the real and the expected performance he was the first person to explain what it meant. This explanation was emphasized by the Cohen Commission on auditors’ responsibilities in 1978, where the expectation gap is characterized
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Research conducted till now on the audit expectations gap specifies that it subsists for numerous reasons. Humphrey et al. (1993) and Porter and Gowthorpe (2004), for instance, have argued that the gap exists due to a deficiency in an auditor’s performance and auditing principles. Pierce and Kilcommins (1996), Boyd et al., (2001) and; McEnroe and Martens (2001), argue that the gap is owed to misapprehensions and misconception of the essence of auditing by the users. These studies suggest that the users do not fully comprehend the purpose of audit and the duties auditors are supposed to play. Thus, they have impracticable expectations of auditors. Previous, study by the Canadian Institute of Chartered Accountants (CICA, 1988) and Porter (1993) recognized the inadequate performance, incomplete principles and unreasonable expectations as the components of the audit expectations gap. Nonetheless, a latter empirical research performed by Porter and Gowthorpe (2004) has demonstrated that segments have transformed over time though the mindset of pessimism as to the audit functions has not been dispensed …show more content…
This is still a debatable issue because such standards may not suit to the desiderata of developing countries. Furthermore, the possibility of fraud, graft and economic malfeasance are high in the public sector in developing countries (Kaufmann, 1997; Gray and Kaufmann, 1998; Sandholtz and Koetzle, 2000). In this deference, it’s possible to argue that there could be more insistence from the intrigued parties, such as global financing agencies and politicians, on auditors to perform the roles which may be outside the scope of the audit jurisdiction.
Though audit expectation gap has been empirically established to exist in Ghana (Onumah et al., 2009; Agyei et al., 2013) just like other studies elsewhere, it appears no Ghanaian study (based on information available to the researcher) has been able to investigate the audit expectation gap among public universities in Ghana. Therefore, the objective of this study is to contribute to this call by being one of the few that have taken that audacious step in filling this
This memorandum highlights significant portions of Statement on Auditing Standards (SAS) No. 115 Communication of Internal Control Related Matters Identified in an Audit and answers some questions frequently asked by accountants about SAS 115 ("The American Institute Of Certified Public Accountants", 2015). SAS 115 Highlights Here are some highlights of SAS 115. Applicability (SAS 115, 2015, para. 01). Definitions. A material weakness (SAS 115, 2015, para. 06).
A financial audit is an independent, objective evaluation of an organization 's financial reports and financial reporting processes. The primary purpose for financial audits is to give stakeholders reasonable assurance that financial statements are accurate and complete. Most internal audits are not adding value. One reason is that “ongoing compliance burdens and pressure to do more with less” is contributing to the decline in perceived internal audit value.
I can simply answer because I want to be a hero. In my opinion, an auditor is a dark knight that saves the world secretly and silently. An auditor has to commit to do his job professionally as well as ethically. As a matter of fact, there have been many corporate and accounting frauds, such as the WorldCom scandal in 2002 and the Madoff Ponzi scheme in 2008,
Although this article may not excessively be used throughout the essay, it is valuable because it gave a better understanding concerning
We monitor our operations constantly to ensure that we are successfully achieving our stated aims and objectives. We do this through a robust monthly reporting structure, six monthly internal audits and a phased external independent audit process. In addition to this, we seek Service Users’ views through telephone questionnaires, anonymised annual surveys and a regular programme of Service
This leads the authors to perform a study with the attempt of
Throughout the case, it can be seen how Cendant Corporation was performing activities that dealt with the interactions of income smoothing. The main cause of performing with Income Smoothing was to make their shareholders and investors believe that they had a professional and ethical operation running. Income smoothing can best be represented as how either gains or losses from a certain period are taken into a good or bad period with losses or no profits. Income smoothing throughout this case was used as an unethical practice performed by Cendant Corporation to achieve financial stability and falsify numbers to make the investors believe they had premium stocks when in reality it wasn’t what was really occurring which would then lead to the
According to the 2015 Building a Grad Nation report, low-income high school students are graduating at a rate 15 percentage points behind their more affluent peers. The graduation rate is decreasing because of a problem that is affecting more and more students which is the opportunity gap. The opportunity gap is a barrier that low-income and minority students encounter when wanting to be educationally successful. The opportunity gap enlarges when students are lacking in resources, services, and experiences. This problem is mostly occurring to low-income and minorities students because they don’t have the advantages to afford the same resources as the privileged students.
I want to help someone change their life around in hopes that they do better in their community. Other than going to school full time I work part time at a grocery store and I 'm the mother to a awesome four year old boy. I have lived in Virginia Beach my whole life and even though we seem to have bi-polar weather I love it here. I hope that when I 'm older though I can move to the country side of Virginia where its more quiet. I recently took a cooking class and it was so much fun, I love learning how to cook new recipes.
ACC 201 Final Project Part I Accounting Cycle Report Vanessa Ann Williams Southern New Hampshire University The accountant cycle has really impacted me to gain insight on the financial side of Peyton Company. In the accountant cycle, there are many particular directions involve determining the growth of the company such as steps, role, omission and financial statements. It’s important to apply every step from the accountant cycle to make a financial critical decision in the long run. This report will have a breakdown of how to apply the accountant cycle for Peyton Company to be aware of future financial decisions to keep the company holding strong.
Auditors started to notice that when the actual payments did not come in (Celizic, 2008). There might be some other symptoms were noticed by the auditor by observing Mr. Pavlo’s lifestyle. They might have been watched about Pavlo’s salary versus his cost of living, i.e., chartering plane, luxury vacation and driving fancy cars. Auditors may have also watched his bank account transactions. 3.
The references used in this study will be used to build knowledge on the subject, and to identify
However, the corporate collapse of HIH Insurance in Australia has raised more questions than answers regarding the integrity of the accounting and auditing profession. The audit expectation gap is the difference between the actual performance of an auditor and what society thinks. According to the American Institute of Certified Public Accountants in 1992, the expectation gap is defined as the difference between what the public and financial users think audit responsibility is and what the auditors think their role is(?). The importance of professional scepticism is essential in enhancing the societal view on auditors. An auditor supplies the independence and objectivity to a financial report complementing the high expectations of third party users
It is this that justifies accounting history as a crucially important academic discipline. “History, in itself is instinctive and indigenous to all of us” (Carnegie. et al, 2011), whether individuals know it or not, everyone’s decision making process is strongly based on past experiences, and the past is the key source resorted to whenever a decision is needed to be made. The same is applicable to accounting, the decisions made today in all practices and approaches are drawn from the historical developments in the accounting process, that have led the practice
Professional skepticism depends on the personal behavioral actions. The need for professional skepticism in an audit cannot be overemphasized. Professional skepticism is an essential part of the auditor 's skill and is very closely interrelated to the concept of auditor independences and professional judgement and contributes to audit quality. In addition to professional skepticism is important and required throughout the audit in engagement acceptances, identifying and assessing risks of material misstatement, designing the nature, timing and extent of further audit procedures that are responsive to assessed risks of material misstatement, and evaluating audit evidence, and forming an opinion on whether the financial statements are prepared, in all material respects, in accordance with the application financial reporting framework.