An investigation of the expectation gap in Egypt

Abstract

Purpose

Investors and financial statement users may have differing beliefs about the responsibility of an independent accounting firm performing an audit of a client's financial statements. This study aims to investigate the existence of an audit expectation gap between auditors and financial statement users in Egypt.

Design/methodology/approach

The research method adopted in this study is identical to that used by Schelluch, Best et al. and Fadzly and Ahmed.

Findings

The results found evidence of a wide audit expectation gap in Egypt in the areas of auditor responsibilities for fraud prevention, maintenance of accounting records, and auditor judgment in the selection of audit procedures. To a lesser extent, an expectation gap was found concerning the reliability of audit and audited financial statements, and the usefulness of audit.

Research limitations/implications

The different economic and cultural conditions in Egypt may restrict the generalisability of this study.

Practical implications

In order to reduce the expectation gap and improve decision‐making by financial statement users, the results of this study support the adoption of the long‐form audit report, augmentation of the auditing framework, strengthening of the auditor's integrity, and finally educating users on the nature and functions of audit.

Originality/value

This paper contributes to the understanding of the diverse nature of the expectations gap by examining the different economic and cultural setting of Egypt.

Citation

Dixon, R., Woodhead, A.D. and Sohliman, M. (2006), "An investigation of the expectation gap in Egypt", Managerial Auditing Journal, Vol. 21 No. 3, pp. 293-302. https://doi.org/10.1108/02686900610653026