There is concern that auditors and the public hold different beliefs about the auditors’ duties and responsibilities and the messages conveyed by audit reports. In recent years, some spectacular and well‐publicised corporate collapses and the subsequent implication of the reporting auditors have highlighted the audit expectation gap. Apparently, public misperceptions are a major cause of the legal liability crisis facing the accounting profession. Given the significance of the expectation gap, it is not surprising therefore that prior research on the expectations problem is substantial. The objective of this paper is to review the literature on the audit expectation gap along the following lines: definition of the expectation gap; nature and structure of the expectation gap; and ways to reduce the expectation gap. It is hoped that such an attempt can provide insights into the audit expectation gap.
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