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The Audit Expectation Gap between Companies and Their Auditors: An Exploratory Study

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  • Rob Boterenbrood

Abstract

This exploratory study aims to provide insight into the audit expectation gap between companies and their auditors measured by the materiality for the financial statement as a whole, defined for the purpose of this paper as the materiality gap. This gap, conceived as a component of the audit expectation gap, is little examined in literature. In order to investigate the existence of a materiality gap, financial statement preparers of the selected companies were asked to estimate the materiality of their financial statement. This was subsequently compared with the outcome of the materiality used by the auditor based on the audit file. Moreover, to obtain more insight into the possible materiality gap, a survey was sent out to the partners of the audit firm involved. This study shows that materiality levels assumed by the preparers of financial statements were lower than the materiality actually applied by the auditors.

Suggested Citation

  • Rob Boterenbrood, 2017. "The Audit Expectation Gap between Companies and Their Auditors: An Exploratory Study," Global Business Review, International Management Institute, vol. 18(5), pages 1124-1133, October.
    • Handle: RePEc:sae:globus:v:18:y:2017:i:5:p:1124-1133
    DOI: 10.1177/0972150917710331
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    References listed on IDEAS

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    1. Keith A. Houghton & Christine Jubb & Michael Kend, 2011. "Materiality in the context of audit: the real expectations gap," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(6), pages 482-500, June.
    2. Firth, Michael, 1979. "Consensus views and judgment models in materiality decisions," Accounting, Organizations and Society, Elsevier, vol. 4(4), pages 283-295, October.
    3. Power, Michael K., 2003. "Auditing and the production of legitimacy," Accounting, Organizations and Society, Elsevier, vol. 28(4), pages 379-394, May.
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    Keywords

    Auditors; gap; materiality; companies;
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