audit expectations gap


audit expectations gap
The gap between the role of an auditor, as perceived by the auditor, and the expectations of the users of financial statements. It may be subdivided into a gap in communications and a gap in performance. The communications gap is caused by public expectations being unreasonable; for example, users of accounts may expect all fraud to have been discovered by a statutory audit, whereas the auditor is only expected to plan the audit to prevent and detect fraud to comply with Statement of Auditing Standards 110, Fraud and Error. The communications gap could be closed by ensuring that the users of accounts understand what an audit is and what its limitations are. The performance gap occurs when public expectations are reasonable but the auditor's performance does not fulfil them, i.e. there is a shortfall in the auditor's performance. This can only be overcome by improving the quality of the auditor's work.

Accounting dictionary. 2014.

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