The Expectation Gap in Auditing

Expectation Gap is the mismatch between peoples’ general idea about audit and the auditor’s idea about audit.

Some of the ideas of people about audit are:

1.    The auditors report to the directors of the company but not the shareholders;

2.    Qualified audit report is more useful to shareholders than an unqualified report;

3.    It is the responsibility of the auditor to detect fraud.

 

Some suggestions have been made as to how to eliminate or reduce the expectation gap.  The suggestions include the following:

1.    Requiring auditors to report on the adequacy of controls to detect and prevent fraud to the audit committee;

2.    Massive education of the general public on the responsibilities of auditors;

3.    Uses of targeted forensic fraud reviews;

4.    Increase the responsibility of the auditor to report suspected frauds.

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