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Audit expectation gap: an empirical analysis

Author

Listed:
  • Paul Olojede

    (Covenant University)

  • Olayinka Erin

    (Covenant University)

  • Osariemen Asiriuwa

    (Covenant University)

  • Momoh Usman

    (Kogi State University)

Abstract

The financial debacles that occurred in the companies like Enron, WorldCom, and Xerox in the USA, Lehman Brothers, Polly Peck in the UK and African Petroleum Plc., Cadbury Plc., in Nigeria had created public distrust with the auditors. The era when the auditor will say ‘trust me’ and that being accepted is over. Now, they must earn the public trust. This study provides an empirical analysis of the scope and nature of audit expectation gap in Nigeria. We used a descriptive and survey research design to achieve the objective of the study. We also collected data through primary source, using structured questionnaire. The study used Mann–Whitney U test and Kolmogorov–Smirnov Z test for the analysis of data and test of normality of distribution, respectively. The results confirmed that audit expectation gap exists in Nigeria, and the new auditor’s report did not have any serious impact in reducing the gap. From the outcome of this study, the audit expectation gap primarily arose from the unreasonable expectation of the users due to their lack of understanding of the roles of auditors. We recommend the launching of a new business-reporting model geared towards releasing more non-financial information to the public and with clear description of the role of independent audit.

Suggested Citation

  • Paul Olojede & Olayinka Erin & Osariemen Asiriuwa & Momoh Usman, 2020. "Audit expectation gap: an empirical analysis," Future Business Journal, Springer, vol. 6(1), pages 1-12, December.
    • Handle: RePEc:spr:futbus:v:6:y:2020:i:1:d:10.1186_s43093-020-00016-x
    DOI: 10.1186/s43093-020-00016-x
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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. Imen Jedidi & Chrystelle Richard, 2009. "The Social Construction of the Audit Expectation Gap: The Market of Excuses," Post-Print halshs-00460146, HAL.
    3. Saeid Ebrahimipour Farasangi & Amirhossein Taebi Noghondari, 2017. "Investigating the Relationship between Expectations Gap from Attitude of Accreditation of Audit Report by Credit Experts and Non-repayment of Granted Facilities in the Branches of Keshavarzi Bank of I," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 199-206.
    4. Mahdi Salehi, 2016. "Quantifying Audit Expectation Gap: A New approach to Measuring Expectation Gap," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 19(1), pages 25-44, May.
    5. repec:dau:papers:123456789/3906 is not listed on IDEAS
    6. Klaus Ruhnke & Martin Schmidt, 2014. "The audit expectation gap: existence, causes, and the impact of changes," Accounting and Business Research, Taylor & Francis Journals, vol. 44(5), pages 572-601, October.
    7. Tanko, Muhammad, 2011. "An Empirical Analysis of Audit Expectation Gap in Nigeria," MPRA Paper 49661, University Library of Munich, Germany.
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    Cited by:

    1. Julia Bettina Leicht & Maximilian Leicht, 2022. "Changes in the climate-related disclosure of German listed companies during the first years of the new reporting standard," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    2. Paul Olojede & Olayinka Erin, 2021. "Corporate governance mechanisms and creative accounting practices: the role of accounting regulation," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 207-222, September.
    3. Alain BURLAUD & Maria NICULESCU, 2024. "Expectation Gap: the Story of the Auditor's Necessary and Impossible Mission," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 22(176), pages 695-723, October.

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