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Corporate fraud and the audit expectations gap: A study among business managers

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  • Hassink, Harold F.D.
  • Bollen, Laury H.
  • Meuwissen, Roger H.G.
  • de Vries, Meinderd J.

Abstract

This paper presents the findings of an empirical study on the audit expectations gap concerning the role of the auditor in corporate fraud cases. The purpose of the study is to assess the significance of a reasonableness gap, a deficient performance gap and a deficient standards gap in the specific context of corporate fraud. In order to distinguish all three elements of the expectations gap, respondents need a certain level of expertise on fraud. Therefore, in this research the audit expectations gap is studied primarily from the perspective of three groups of business managers, based on the fact that they typically have a special responsibility in fraud cases. Bankers are used as a control group to assess the potential differences between the views of business managers and ‘society in general’. This study provides clear evidence of a substantial audit expectations gap in the context of fraud, both with respect to the auditor's performance as well as the auditor's formal obligations as laid down in existing standards. However, compared to bankers, business managers are less inclined to judge auditors’ performance of existing duties as inadequate, and see fewer points where auditing standards should be amended.

Suggested Citation

  • Hassink, Harold F.D. & Bollen, Laury H. & Meuwissen, Roger H.G. & de Vries, Meinderd J., 2009. "Corporate fraud and the audit expectations gap: A study among business managers," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 18(2), pages 85-100.
    • Handle: RePEc:eee:jiaata:v:18:y:2009:i:2:p:85-100
    DOI: 10.1016/j.intaccaudtax.2009.05.003
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    References listed on IDEAS

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    1. Yusuf Munir Sidani, 2007. "The audit expectation gap: evidence from Lebanon," Managerial Auditing Journal, Emerald Group Publishing, vol. 22(3), pages 288-302, March.
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    Cited by:

    1. David Carassus & Khaled Albouaini & Marie Caussimont, 2013. "Une analyse de l'Audit Expectation Gap dans le contexte français," Post-Print hal-02432110, HAL.
    2. Judit Füredi-Fülöp, 2015. "An Empirical Study of Audit Expectation Gap in Hungary," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 11(01), pages 37-46.
    3. Shabnam Fazli Aghghaleh & Zakiah Muhammaddun Mohamed, 2014. "Fraud Risk Factors of Fraud Triangle and the Likelihood of Fraud Occurrence: Evidence from Malaysia," Information Management and Business Review, AMH International, vol. 6(1), pages 1-7.
    4. Sean Andre & Aaron Pennington & Becky L. Smith, 2014. "Fraud Education: A Module-Based Approach For All Business Majors," Business Education and Accreditation, The Institute for Business and Finance Research, vol. 6(1), pages 81-94.
    5. Siti Nur Shahirah Sahidan & Raziah Bi Mohamed Sadique & Norhayati Alias & Noor Hasniza Haron, 2023. "The Determinants of Audit Expectation Gap in Malaysia," Accounting and Finance Research, Sciedu Press, vol. 12(4), pages 1-43, November.
    6. George Silviu CORDOŞ & Melinda Timea FÜLÖP, 2020. "Debates In The Literature Regarding Audit Reporting," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(22), pages 1-4.
    7. Dykxhoorn, Hans J. & Sinning, Kathleen E., 2010. "A review and analysis of international accounting research in JIAAT: 2002–2010," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 19(2), pages 137-153.
    8. Sargiacomo, Massimo & Everett, Jeff & Ianni, Luca & D'Andreamatteo, Antonio, 2024. "Auditing for fraud and corruption: A public-interest-based definition and analysis," The British Accounting Review, Elsevier, vol. 56(2).

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