Journal of Business and Organizational Development

Volume 2, September 2010

2010 Cenresin Publications

www.cenresin.org

EVIDENCE OF AUDIT EXPECTATION GAP BETWEEN AUDITORS AND USERS OF

FINANCIAL REPORTS IN NIGERIA

Odia James and F.I.O Izedonmi

Department of Accounting
University of Benin, Benin City, Nigeria.
E-mail: odiajames@yahoo.com

ABSTRACT
The paper considers evidence of audit expectation gap between auditors and users of
financial statement s which include investors and bankers in Nigeria. It was found that
audit expectation gap existed in the following areas: auditors exercising judgment in the
selection of audit procedures, auditors are responsible for preventing and detecting frauds
and errors, auditors are responsible to produce financial statements, extent of assurance
given by auditors is clearly communicated and educating the public will reduce the
perception towards auditors. However, there was improvement in investors knowledge
following reading the auditors report.
Key Words: Audit, audit expectation gap, investors, bankers
INTRODUCTION
The term audit expectation gap was first introduced to audit literature by Liggio in 1974.
He defined it as the difference between the levels of expected performance as envisioned
by both the users of financial statement and the independent accountant. Following the
massive 1970s corporate failures in the U.S.A such as Equity funding in 1979, the U.S
Accounting Profession set up the Cohen Commission on Auditors Responsibilities in 1974.
In 1978, the Commission extended Liggios definition of audit expectation gap and
concluded that there was an expectation gap between what the auditors do and what
the public expects of them.
From the 1970s, the audit expectation gap has received much attention owing to the
divergent notions of the auditors responsibilities and the different perceptions between
the financial statement users and the auditors. For decades, the accounting profession
has been troubled with the issue of the audit expectation gap because it has brought the
credibility and work of the external auditors into increased questionings in many countries
among the world. This is evidenced by the widespread criticisms and high levels of
litigations which have become more pronounced following various corporation failures and
collapses.
The purpose of this paper is to examine the existence of expectation gap between
auditors and users of financial reports in Nigeria. Actually, all over the world, researches
have been done that reveal audit expectation gap. This paper intends to ascertain
whether the gap exists in Nigeria and to find out the effectiveness of the auditors report
as a communication medium between auditors and users of financial statements. The
main focus of the paper is to measure the existence of audit expectation gap in Nigeria by
considering the differences between the expectations of users of audited financial reports
and auditors perception of their roles and responsibilities. Basically, financial statements
are useful to users in assessing the financial performance, financial position and change in
financial position. They are communicating and reporting tools which enable users in
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Odia James and F.I.O. Izedonmi

making economic decisions. Auditors report communicates opinion regarding their audit
work and the audited financial statement in line with Section 359 of the Companies and
Allied Matters Act of 1990.
The rest of the paper is divided into five sections. The next section depicts the relevant
companies acts relating to the auditors duties and responsibilities as well as the auditors
report in Nigeria as well as reviews prior literatures on the audit expectation gap. Section
III is the research materials and method used in the study. Section IV shows the results
and discussions of the results while the last section is the conclusion.
COMPANIES ACTS AND FINANCIAL REPORTING IN NIGERIA
The Companies and Allied Matters Acts (CAMA) 1990 deal with corporate financial
reporting in Nigeria of all listed and unlisted incorporated companies in Nigeria. Also,
various sections of CAMA specify the roles and responsibilities of the management and
the auditor in the preparation and presentation of financial statements. For instance,
Section 334(1) places the responsibility for the preparation of financial statements for the
financial on directors. They were to prepare the following financial statements(section
334(2):statement of accounting policies, profit and loss account (income
statement),balance sheet, notes on the account ,the auditors report, directors report,
cash flow statement, value-added statement and five-year financial summary.
Section 343(1) states that a companys balance sheet and every copy of it which is laid
before the company in its annual general meeting (AGM) or delivered to the Corporate
Affairs Commission must be signed by two of its directors on behalf of the board of
director.
Normally the auditor is appointed at the annual general meeting to audit the financial
statement of the company and to hold office from the conclusion of that AGM to the next
(section 357).Again, persons appointed as auditors of a company are members of the
bodies of profession accountants in Nigeria(Section 358(1)) and if the person is not (1) an
officer or servant of the company (2) partner or in employment of an officer or servant of
the company (3) does not provide to the company professional advise in a consultancy
capacity in respect of secretariat taxation or financial management or (4) a body
corporate.
Section359 (1) states that the auditors must make a report to the members of a company
on account examined by them including the balance sheet and the profit and loss
account. The matters to be expressly stated in the auditors report must fully comply with
schedule 6 of CAMA 1990 as:
(1)
Whether they have obtained all the information and explanations which to the best
(2)
of their knowledge and belief were necessary for the purpose of their audit.
(3)
Whether in their opinion proper books of account have been kept by the company
so far as appears from their examination of those books and proper returns
adequate for the purpose of their audit have been received from branches not
visited by them.
(4)
(1) Whether the company balance sheet and profit and loss accounts dealt with by
the report are in agreement with the books of account and returns.
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(2) Whether in their opinion and to the best of their information and according to the
explanations given them, the said statements give the information required by the Act in
the manner so required and give a true and fair view.
Section 360 dwells on auditors duties and power. S360(1) states that it shall be the duty
of the duty of the companys auditors ,in preparing their report to carry out such
investigations as may enable them to form an opinion as to the following matters
whether:
(a)
Proper accounting records have been kept by the company and proper returns
adequate for their audit have been received from branches not visited by them.
(b)
The companys balance and profit and loss account are in agreement with the
accounting records and returns.
The auditors were to state in their report where there is consistent or inconsistent
information in the accounts presented to them and whether proper accounting records
have been received of branches not visited by them (Sections 360 (2&5) )
Users Perceptions of Auditors Roles and Responsibilities
The existence of the gap has been found to be due to the different perceptions between
the public (including clients) ,students, bankers, investors etc and auditors with respect to
their actual or uncertain roles and responsibilities of auditors regarding fraud detection
and prevention, preparation of financial statements, internal control [3,9] the clients
satisfaction with the services provided by the auditors, issues of auditors independence
and objectivity etc [7,28,32] differences in perception of audit objectives , differences in
perception or audit report [11], differences in users and auditors attitude [14,15,34],
Laxness of the auditing standards and auditors perceived and somewhat different
interpretation or failure to comply with standards set by the auditing profession [6,32],
difference between the materiality levels of auditors and users of financial statements (3],
differences in belief.
Causes of the Audit Expectation Gap
While reviewing the contributory factors that caused audit expectation [27 ], it was found
to be due to: the complicated nature of the audit function, auditors conflicting roles,
retrospective and subjective evaluation of auditors performance, time-lag in the
accounting profession responding to changing and expectations of users [13,15] and the
self- regulation process of the auditing profession. A self-regulatory framework creates
professional monopoly which likely compromises the audit quality at clients expense and
tolerates the deficient performance of auditors [14,4,37,34,28]. It is believed that the
process of self-regulation and its attendant factors enlarge the expectation gap [10].
Also, the ignorance, naivety and misconception of the public in terms of the nature,
purpose and capacities of an audit have caused unreasonable expectations (such as the
expectations by users for the detection and disclosure of illegal acts by company officials,
guarantee that financial statements are accurate, verify every transaction of audit
company, examine and report on the efficiency and effectiveness of companys
management and administration, etc)
imposed
on the auditors [15,34,8].Also,
expectation gap have been attributed to users confusion, widespread misunderstanding,
ignorance and/or lack of education and communication gap [7]
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Unreasonable expectation is argued to have harmful implications on the auditing

profession as the public may not be able to recognize the contribution of auditors to
society and thereby undermine the value of audit function and limit auditors work. Porter
[34] decomposed the total audit expectation gap has been decomposed into substandard performance by auditors where the auditors fail or perceived to comply with
legal and professional requirement (16%), unreasonable expectations in societys
expectations (34%) and deficient standards (50%).[34].It is clear from her analysis that a
larger part of the gap lies with the auditors and the profession.
The unreasonable expectations and deficient performance [34,8,28] are shown in the
table below
Unreasonable Expectations by the Deficient Performance by Auditors
public
-Guarantee financial statements are -Detect theft of corporate assets by nonaccurate
managerial employees
-Guarantee auditee company is solvent
- Detect theft of corporate assets by
- Verify every accounting transaction
companys directors and senior management
- Prevent fraud and error in the company
- Detect illegal acts by companys officials
- Plan the accounting and internal control which directly affect companys account
system
-Disclose deliberate distortions of financial
- Examine and report on efficiency and information in the audit report
effectiveness of companys management - Disclose illegal acts by companys officials
and administration.
which directly affect companys account
- Examine and report on fairness of non- - Disclose illegal acts which directly affect
financial information
companys account
- Examine and report on reliability of - Express doubts in the audit report about
financial
information
presented
on companys continued existence.
auditees annual report
Report
suspicious
circumstances
- Disclose illegal acts which do not directly encountered in the audit suggesting that
impact on companys account.
theft or deliberate distortion of financial
- Disclose illegal acts by companys information may have occurred in the
officials which do not directly impact on auditees financial statement.
companys account.
- Disclose in audit report theft of -In the absence of a regulated industry
companys assets by non-managerial duty,report to an appropriate authority
employees.
illegal acts by auditees officials.
- Report tax breaches to tax authority
The audit expectation gap is also due to the probabilistic nature of auditing, the
evaluation of audit performance upon information or data not available to the auditor at
the time the audit was completed, evolutionary development of audit responsibilities
which create time lags in responding to changing expectations, corporate crises.
Based on the role theory [1] the role of the auditors can be viewed in terms of the
interactions of the normative expectations of the various role senders in society having
some direct or indirect relationships to the role position [28], these different groups
include: management, security commission, institutional investors, analysis etc, which
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may hold varying expectations of the auditors which may change from time to time
depending on the role expectations of the groups. The confrontation of the auditor by
divergent role expectation results in role conflict because he is placed in multi-expectation
situations. The auditors compliance with one role requirement may make it more difficult
to comply with another or the two or more roles expectations are mutually contradictory
[10], the difference in role perception by the auditor and role expectations by the groups
as well as the different expectations between the auditors and the role senders has give
risen to the expectation gap.
The provision of non-audit services for audit clients has also resulted in conflict of interest
which leads to the expectation gap [10], as non-audit services fees has increased
substantially in the recent. It has been remarked that auditors are playing multiple roles
at the same time because of these extra services such as (i) Independent attestator to the
shareholders and (ii) advisor to management, auditors are placed in conflicting position
because shareholders want them to identify and report problems with the financial
statement while management may expect the auditors to ignore the manipulation
[22].Such conflicts of interest are regarded as inter- sender role conflict [35]. Auditors
role conflicts have negative implications on auditors independence and their ability to
perform a just audit [18]. They are sandwiched in a dilemma either to be obstinately
ethical and face replacement by management or buddle under managements pressure,
resulting in compromise of their independence and secure more attractive remuneration
and income.
Detection and prevention of Fraud
One contending area which continues to spark off debate is the issue of the detection and
prevention of fraud. The public expects the auditor to take over this responsibility. They
believe that until the auditors are duty-bound or expand their responsibility over frauds
detection and prevention the gap will continue to exist. Nevertheless, it is doubtful if the
profession will change its defensive approach and will descend to nailing itself and the
auditors owing to the users demands. It must be asserted that the area of fraud of
detection has the longest history [13] and widest expectation gap. On the other hand,
some have argued that until fraud detection by auditors is expunged from the publics
consciousness, no matter the attempts to inform them (the public) otherwise will change
their thinking that the auditors are responsible for fraud detection [38]. Auditing
education only will not change the public perception [7]. Regrettably, the issue of new
auditing standards on fraud has not closed the expectation gap [32, 39, 38]. Even the
most sweeping reforms of the Sarbanes Oxley (SOX) Acts of 2002 has not addressed the
situation because each emerging corporate crisis leads to new expectations and
accountability requirements, and hence create another expectation gap. For instance the
current global financial meltdown has put extra demands on the accounting profession
and the auditors. More often than not, users hold auditors to be responsibilities for fraud
prevention and detection [9,8,3]. Likewise, jurors acting as professional in law suits
perceived the actively search for the smallest fraud. This explained why the jurors held
the auditors liable on occasions when a company failed or a fraud is uncovered (8]. It has
been noted that auditors responsibilities concerning fraud have been a recurrent problem
as it is clear that public expectation on this issue was not satisfied (15].
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Auditors Report
Some researchers have argued strongly that the content of the auditors report ought to
cover not only the description of the audit work carried out but also specific comments on
the individual aspects of the companys performance and position (6] .Although this might
not be possible but their proposal is because the auditors have always defended
themselves and try to exonerate themselves whenever the financial statements are call
into questioning. They argued that their responsibility is only to ascertain the level of
adherence to set standards, procedures, principles and policies. The expanded auditor
report that ensued has not solved completely the expectation gap (36,17] owing to
financial statement reliability and difficulty of users understanding of the audited financial
statements etc. However, a reduction in the expectation through the use of long-form
audit report had been reported in Australia (36]. It was also found that the long-form
report has potential for communicating to audit report users a better understanding of the
nature of the auditing function. The reduction in the audit expectation gap only
addressed specific issues in the scope section of the report such as the auditors
responsibility for the prevention and detection of fraud and managements responsibility
for the maintenance of internal control system ( 3].
A doubled edged effect of the
auditors report was indicated in Hong Kong being effective in reducing perpetual
differences on a few dimensions but also creating greater disenchantment and devaluing
of the audit function which would lead to a larger expectation gap in the long
run.(29]The language of the auditors report had the ability to influence users
perception. on auditors responsibilities.
MATERIALS AND METHOD
The research method adopted in the study is similar to that used by (3,4,36] because it
provides a reliable assessment of the audit expectation gap. We design a questionnaire of
semantic differential belief statement to measure the message communicated by the audit
report in Nigeria. The questionnaires were sent to the users of audit report in Nigeria
together with a sampled audit report. A total of 150 subjects were randomly consisting of
50 subjects from each of the three groups auditors, bankers and investors. The
response rates were auditors (96%),bankers (100%) and investors(98%).The group of
investors included the general public who own shares in one company or another,
brokers, financial analysts. Our subjects fall into the various respondents that have been
used to elicit opinions such as auditors and lawyers and judges, jurors, investors,
shareholders, bankers etc.
The questionnaire used consisted of three sections. Section one contains six questions
relating to respondents demographics. The second section has two parts: Parts Aand B .
Part A gathered data on the existence of expectation gap in Nigeria. It consisted of eleven
likert-scale questions with five-point rating scale which require respondents to choose
from strongly agree to strongly disagree. Respondents were to choose a number from the
scale which identified their level of agreement with each question. The questions were
structured following prior empirical researches and the responsibilities and duties of
auditors laid down in CAMA (1990).
Part B examines the users understanding of the auditors report as well as analyzes its
usefulness. It consists of an attached auditors report with ten likert-scale questions as in
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part A. The respondents were required to read the auditors report before answering the
questions based on their understanding on the report without applying previous auditing
knowledge. The wording of questions in part B was changed to avoid the probability of
respondents referring back to previous answered questions in part A.
The mean response for each group of respondents was scoring strongly agree as 5, agree
as 4 to strongly disagree as 1 and taking the average for each question. The t-test was
used to test for significant differences between the three groups and the pre and post
perceptions of each group of the duties of the auditor. The t-test was used because it
could test significant differences in means between two populations. Micro-Soft office
(Excel) 2007 was used to generate the means, standard deviation and the t-values.
Where significant differences existed between the three groups and it could be concluded
that expectation gap existed in Nigeria.
RESULTS AND DISCUSSION
Demographic of Respondents
The questionnaires were sent to 150 respondents \made of 50 subjects from of the three
groups- auditors, bankers and investors. The response rates and other demographics such
as accounting education, auditing experience are shown in table 1 below.
Table 1 Demographics of Respondents
Sampled
Surveys
Responses Auditing
Auditing
Investment Read
Groups
Sent
Received
Education Experience in
Auditors
No
Yes
Yes
Business
Report
%
No
No
Yes
Yes
No
No
Auditors
50
48
48
48
48
48
96
0
0
0
0
Bankers
50
50
12
0
50
50
100
38
50
0
0
Investors
50
49
21
0
49
39
98
28
49
0
10
Total
150
147
81
48
147
137
98%
66
99
0
10
From table 1, the overall response rate of the questionnaires distributed was 98% .The
accounting education relating the bankers and investors appears low. Also these
respondents do have auditing experience. It is assumed that they are less informed about
the responsibilities of auditors, the auditing process and the uses of financial statements.
Therefore, there is the likelihood of the existence of expectation gap notwithstanding that
a greater proportion of respondents read the auditors report.
Results from the Semantic Differential Belief Statements
Table 2 and 3 measure the level and nature of expectation gap in Nigeria by providing the
mean responses for each of the respondent groups both within groups and across groups
by using the t-statistic to test for significant differences between the three respondent
groups (see table 7). Table 3 specially tests perception of users of financial statements
(investors and bankers) on the responsibilities of auditors after they have read the

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Odia James and F.I.O. Izedonmi

auditors report. Significant differences within and between groups reveals the existence
of audit expectation gap.
Table 2 Responsibility Statements
Auditors(N=48) Bankers(N=50) Investors(N=49) Across
Statements
Groups

Auditor is responsible to 1.00

3.08
produce
financial
statement.
2
Auditor is responsible for 1.25
3.08
preventing
fraud
and
errors.
3
Auditor is responsible for 1.25
3.24##
detecting fraud and errors.
4
Auditor should make 100% 1.29
3.04
examination
in
audit
procedure
5
Auditor should report all 1.00
4.56##
omission discovered in the
report
6
Extent of audit work 4.81
4.76
performed
is
clearly
communicated
7
Extent of assurance given 4.77
4.72
by auditor performed is
clearly indicated
8
Auditor is responsible for 1.00
3.00##
maintaining
accounting
records.
9
Auditor exercise judgment 4.75
2.92##
in
selecting
audit
procedure
10 Educating the public will 5.00
5.00
reduce their perception
towards auditors
11 Auditor is unbiased and 5.00
5.00
objective
** Significantly different from auditors at 5%
## Significantly different from auditors at 5%
++ Significantly different between bankers and investors at 5%

1.98

2.02

2.55++

3.41
3.61

4.12

3.80++

3.31++

1.73**

3.89**

4.31** ++

4.22

Table 2 provides details of the responses concerning some of the users perception of
some of the responsibilities of the auditors .An audit expectation gap indicated by a
significant was for found between the auditors and the two respondent groups in relation
to the responsibility of auditors for maintaining accounting records( statement 8) and the
auditors exercise judgment in selecting audit procedure (statement 9).The results show
that auditors believe management is responsible for the maintenance of accounting
records whereas bankers and investors thought otherwise. Again auditors believe they
exercise considerable judgment in the selection of audit procedures, but bankers and
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investors seem to indicate some of this judgment by given to Manament. An audit

expectation gap was also found between the auditors and bankers regarding auditors
responsibility to detect fraud and errors (statement 3) and auditors should report all
omissions discovered in the report (statement 5).A gap was found between auditors and
investors was found in respect of education of the public will reduce their perception
towards auditors (statement 10).All the three groups were in agreement that auditors
should make 100% examination in audit procedures(statement 4),auditors are unbiased
and objective (statement 11).The agreement by them that auditors are to produce
financial statements (statement1) show and confirm their deficiency and low accounting
education and auditing experience .
Audit expectation gap was also found to exist between investors and bankers that the
auditor is responsible for preventing frauds and errors (statement 2), extent of audit work
and is clearly communicated (statement 6) and assurance given by auditors are clearly
communicated (statement 7).
Table 3 Post Users perception on auditors responsibilities based on the
auditors report
Statements
Auditors
Bankers Investors Across
Groups
12
Auditor is responsible to produce 1.00
3.24
1.24++
1.83
financial statement.
13
Auditor
is
responsible
for 1.00
3.16##
2.35
2.17
preventing fraud and errors.
14
Auditor exercise judgment in 4.83
3.80##
4.00**
4.21
selecting audit procedure
15
Auditor
is
responsible
for 1.00
3.40##
4.33
2.91
maintaining accounting records
16
Extent of assurance given by 4.83
2.68
3.86**
3.79
auditor performed is clearly
indicated.
17
Auditor should make 100% 1.44
3.28
3.33
2.68
examination in audit procedure
18
Extent of audit work performed is 1.13
2.64##
3.65
2.47
clearly communicated
19
Auditor
is
responsible
for 4.83
3.28##
2.67**
3.59
detecting fraud and errors.
20
Educating the public will reduce 5.00
5.00
4.37**
4.79
their perception towards auditors
++
21
Auditor is unbiased and objective 5.00
5.00
4.16 ++
4.72
** Significantly different from auditors at 5%
## Significantly different from auditors at 5%
++ Significantly different between bankers and investors at 5%
Table 3 shows the results of the mean responses of respondent groups after reading the
auditors report. Audit expectation gap was found between the three groups in auditors
exercising judgment in the selection of audit procedures (statement 14) and auditors are
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Odia James and F.I.O. Izedonmi

responsible for detecting frauds and errors (statement 19).No evidence of an expectation
gap appears concerning auditors should make complete examination in audit procedures.
However, evidence of expectation gap between auditors and investors appears concerning
auditors are responsible to produce financial statements (statement 12), extent of
assurance given by auditors is clearly communicated (statement 16) and educating the
public will reduce the perception towards auditors (statement 21).There tends to be
significant improvement after reading the auditors report by investors compared to the
bankers auditors are responsible to produce financial statements.
Evidence of expectation gap between auditors and bankers is found in auditors
responsibility for fraud and errors prevention (statement 13) and extent of audit work
performed is clearly communicated (statement 18).The perception of investors and
bankers as regards prevention of frauds and errors as well as education of the public
reduce the expectation gap seems to be aspect of the audit expectation gap in Nigeria.
Also there is significant difference between investors and bankers that auditors are
unbiased and objective.
Table 4 PRE AND POST CHANGE IN AUDITORS VIEW ( Mean responses)

Statements Q1
Q2
PRE
1.00 1.25
POST
1.00 1.00
T-Value
0.00015
** Significant at 5%

Q3
1.25
4.83
1.269

Q4
1.29
2.06
0.257

Q6
4.81
1.13
3.645**

Q7
4.77
4.83
0.475

Q8
1.00
1.00
-

Q9
4.75
4.83
0.397

Q10
5.00
5.00
-

Q11
5.00
5.00
-

Table 4 shows the mean responses of the pre and post views of auditors. There is no
change in mean of statements Q1, Q2, Q8, Q10 and Q11 , indicating no change in
knowledge following reading the auditors report .However, positive change was noticed in
statements Q3,Q4, Q6,Q7 and Q9 and negative change in Q6.A significant difference
revealing expectation gap by auditors was found in relation to the extent of audit work
performed was clearly communicated (Q6).
Table 5 PRE AND POST CHANGE IN INVESTORS (Mean responses)

Statements Q1
Q2
PRE
1.98 2.18
POST
1.24 2.35
T-Value
0.009 0.639
** Significant at 5%

Q3
3.41
2.67
0.012

Q4
3.61
3.33
0.559

Q6
3.55
3.65
0.656

Q7
3.31
3.86
0.579

Q8
2.29
4.43
2.56**

Q9
3.98
4.00
0.490

Q10
4.20
4.37
0.440

Q11
4.22
4.16
0.784

From table 5 expectation gap is revealed in the significant differences between investors
that auditors are responsible for maintaining accounting records (Q8). Again, the decrease
in the means in statements Q1,Q2,Q3,Q4 and Q11 showing investors disagree to some
extent with regard to these statements. There seems to be better improvement in the
respondents views after reading the report.

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Table 6 PRE AND POST CHANGE IN BANKERS (Mean responses)

Statement
s
PRE

Q1

Q2

Q3

Q4

Q6

Q7

Q8

Q9

Q10

Q11

3.08

3.08

3.24

3.08

4.76

4.72

3.00

2.92

POST

3.24

3.16

3.28

3.28

2.64

2.62

3.40

3.80

5.0
0
5.0
0
-

5.0
0
5.0
0
-

T-Value

0.69 0.843 0.91 0.54 8.248* 9.892* 0.31 0.01

2
2
8
2
*
*
9
9
** Significant at 5%
In table 6, the increase mean in statements Q1 and Q8 shows that the respondents
knowledge did not really improve after reading the report. Again, the increase in the
means in statements Q2, Q3, Q4, Q8 and Q9 shows bankers agree to some extent with
regard to these statements; a decrease of mean in statements Q6 and Q7 shows their
disagreement with these statements. A significant difference indicating expectation was
also found regarding Q6 and Q7.
CONCLUSION
The paper has considered evidence of audit expectation gap between auditors and users
of financial statements in Nigeria. It was found expectation gap exists in auditors
exercising judgment in the selection of audit procedures and auditors are responsible for
preventing and detecting frauds and errors, auditors are responsible to produce financial
statements, extent of assurance given by auditors is clearly communicated and educating
the public will reduce the perception towards auditors. No evidence of an expectation gap
appears concerning auditors should make complete examination in audit procedures.
The evidence of expectation gap between auditors and investors appears concerning
auditors are responsible to produce financial statements, extent of assurance given by
auditors is clearly communicated and educating the public will reduce the perception
towards auditors.
There tends to be significant improvement after reading the auditors report by investors
compared to bankers in relation to auditors responsibility to produce financial statements
and maintain accounting records.
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Appendix
Calculated T-Statistic
Statements Auditors
&Investors
Q1
0.000176
Q2
0.000671
Q3
1.561
Q4
1.6072
Q5
1.715
Q6
1.469
Q7
1.178
Q8
2.310**
Q9
7.400**
Q10
6.475**
Q11
1.506
Q12
0.044
Q13
1.407
Q14
6.693**
Q15
1.931
Q16
6.229**
Q17
0.072
Q18
1.656
Q19
7.800**
Q20
8.120**
Q21

Auditors&
Bankers
1.812
1.834
2.460 ##
1.056
7.003##
0.555
0.605
6.800##
2.711##
1.024
4.487##
4.865##
4.052##
1.623
0.078
7.431##
5.489##
-

Investors
Bankers
0.0046
5.477 ++
0.8842
0.1166
0.023
2.488++
9.213++
0.080
0.0019
4.230++
1.014
4.527++
0.030
0.422
0.002
0.0004
0.8649
0.0005
0.0616
5.349++

&

1.743
9.995++
** Significantly different from auditors at 5%
## Significantly different from auditors at 5%
++ Significantly different between investors and bankers at 5%
128