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Article
Publication date: 1 March 2006

R. Dixon, A.D. Woodhead and M. Sohliman

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…

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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.

Details

Managerial Auditing Journal, vol. 21 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 16 November 2021

Lars Haffke

Money Laundering Reporting Officers (MLROs) carry out day-to-day anti-money laundering (AML) tasks while directors ultimately remain responsible for AML compliance…

Abstract

Purpose

Money Laundering Reporting Officers (MLROs) carry out day-to-day anti-money laundering (AML) tasks while directors ultimately remain responsible for AML compliance. Therefore, directors’ expectations of what their MLROs do should ideally coincide with what their actual tasks to minimise liability risk. This paper aims to test for gaps between MLROs and their directors in terms of knowledge, expectations and performance of AML tasks. Likewise, it is researched whether MLROs and directors communicate well with regard to MLROs’ tasks.

Design/methodology/approach

This paper first develops a model for analysing the dyadic relationship between MLROs and their directors, based on the audit expectation-performance gap. Second, a paired electronic survey of MLROs and directors of German companies was conducted in autumn 2020, testing for participants’ knowledge, expectations and performance of possible AML tasks (n = 136 pairs).

Findings

While there is no knowledge or performance gap among MLROs and directors, expectations among them are partially unreasonable and their communication needs to be improved. Additionally, this study suggests that MLROs of German non-financial businesses are less knowledgeable, perform AML duties more poorly, and communicate less effectively with their directors.

Practical implications

Training of MLROs and communication with their directors need to be improved. Especially in the non-financial sector, action is urgently required.

Originality/value

This paper reports the results of the first paired survey of MLROs and their directors, offering unique insights into their relationship and the status of private AML efforts.

Article
Publication date: 9 August 2021

Mahdi Salehi and Arash Arianpoor

The purpose of this paper is to investigate the consequences of the auditor’s choice in group companies and the expectation gap of listed firms on the Tehran Stock Exchange (TSE).

Abstract

Purpose

The purpose of this paper is to investigate the consequences of the auditor’s choice in group companies and the expectation gap of listed firms on the Tehran Stock Exchange (TSE).

Design/methodology/approach

In this study, 128 companies (768 observations) listed on the TSE during the period 2012 to 2017 have been investigated. To test the hypotheses, logistic regression has been used.

Findings

The results showed that companies that are members of business groups are more likely to choose their auditors from large audit firms. The research findings also showed no significant relationship between the business group firms that have used the large auditor and the financial reporting quality. The results showed a positive and meaningful relationship between the member firms that use the large auditor and the audit fees. The results showed a negative and significant relationship between membership in business groups and the audit expectations gap.

Originality/value

Despite the importance of the audit performance, defining auditors’ roles most acceptably has always been challenging to create a gap through the diverse understanding of auditors’ role, which is the distance of perception between users’ auditors. For this reason, over the past years, the audit expectation gap and how to reduce it have focused on academics, professional accounting firms and users of financial statements. As any unmet expectations from the community will reduce the audit firm’s credibility and ability to gain and be widely detrimental to stakeholders, the audit study’s expectation gap in performing audit study is critical. Although there are extensive studies on the gap in auditing expectations in developed economies, most conclusions cannot be attributed to developing countries such as Iran due to cultural and legal differences. Besides, the audit environment in Iran and existing laws can have different results. This research also helps to bridge this gap by providing additional guidance to regulators. Besides, as all recent studies on the expectation gap were qualitative, the present study measures the expectation gap through quantitative statistical methods.

Details

Management Research Review, vol. 45 no. 4
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 6 January 2008

Azham, Ali, Lee Teck Heang, Rosli Mohamad and Marianne Ojo

The accounting profession has long faced the issue of an audit expectation gap; being the gap between the quality of the profession’s performance, its objectives and…

1216

Abstract

The accounting profession has long faced the issue of an audit expectation gap; being the gap between the quality of the profession’s performance, its objectives and results, and that which the society expects. Studies have been carried out worldwide to determine the effect of education in narrowing the audit expectation gap. Extending the knowledge acquired, this paper investigates whether internship program could reduce the audit expectation gap in Malaysia. Using a pre‐post method, the research instrument adapted from ferguson et al. (2000) is administered to the UUM’s accounting students before and after completing an internship program. The results show a significant change in their perceptions after the internship program. The results show a significant change in their perceptions after the internship program. However, changes in perceptions may not warrant an internship program as a means of reducing the audit expectation gap as misperceptions about the duties of auditors for fraud prevention and detection are still found among respondents. Nevertheless, an internship can still be used to complement audit education as it is an ideal way to expose students to professional issues and enables them to have a better insight of the actual performance and duties of auditors.

Details

Journal of Financial Reporting and Accounting, vol. 6 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 December 2002

Ian P. Dewing and Peter O. Russell

This paper reports the results of a postal questionnaire survey of UK primary stakeholders, members of the Institutional Fund Managers Association, as to the definition of…

4048

Abstract

This paper reports the results of a postal questionnaire survey of UK primary stakeholders, members of the Institutional Fund Managers Association, as to the definition of the expectations gap, its constituents, and the extent to which the expectations gap might be narrowed by audit regulation. The study revealed that fund managers were aware of the audit expectations gap and were particularly concerned about the scope and responsibilities of the auditor, and monitoring of auditors’ work. Fund managers agreed that increased regulation offered potential to narrow the expectations gap, especially as regards monitoring and discipline of auditors. The paper concludes that establishment of the Accountancy Foundation should provide greater independence to the investigation and disciplinary processes of the existing regulatory framework, and thus go some way to narrowing the expectations gap. Concerns may remain about its perceived independence of the profession and the lack of a specific obligation to investigate auditors’ work in circumstances of corporate failure.

Details

Managerial Auditing Journal, vol. 17 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 27 March 2007

Yusuf Munir Sidani

The audit expectation gap has been examined in many regions of the world, but the extent of such a gap has not been investigated in many Middle‐Eastern countries. This…

5694

Abstract

Purpose

The audit expectation gap has been examined in many regions of the world, but the extent of such a gap has not been investigated in many Middle‐Eastern countries. This study attempts to assess the possible existence of an expectation gap between accountants and non‐accountants in Lebanon.

Design/methodology/approach

Survey research was conducted on a sample of accountants and non‐accountants and comparisons made.

Findings

A significant “reasonableness gap” was uncovered. There is a gap between the auditors' understanding of their profession compared with the perceptions of others. There is a significant difference in perceptions of the role of the auditor in respect of fraud detection. Neither group had a strong image of the Lebanon profession compared with worldwide audit practices or with the technical qualifications of the auditors.

Research limitations/implications

This research can be extended through assessing whether there are differences between different non‐accountants (judges, lawyers, bankers, brokers, etc.) in terms of their understanding of the role of external auditors.

Practical implications

Much more concerted effort needs to be exercised from professional syndicates and other relevant stakeholders in developing the image of the profession and addressing the varying perceptions and attitudes towards it.

Originality/value

This paper adds evidence to the important debate about expectation gap from a region that has had little coverage.

Details

Managerial Auditing Journal, vol. 22 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 5 August 2014

Linda Schweitzer, Sean Lyons, Lisa K.J. Kuron and Eddy S.W. Ng

The purpose of this paper is to investigate the gender gap in pre-career salary expectations. Five major explanations are tested to explain the gap, as well as understand…

2279

Abstract

Purpose

The purpose of this paper is to investigate the gender gap in pre-career salary expectations. Five major explanations are tested to explain the gap, as well as understand the relative contribution of each explanation.

Design/methodology/approach

Data were collected from 452 post-secondary students from Canada.

Findings

Young women had lower initial and peak salary expectations than their male counterparts. The gap in peak salary could be explained by initial salary expectations, beta values, the interaction between beta values and gender, and estimations of the value of the labor market. Men and women in this study expected to earn a considerably larger peak salary than they expected for others.

Research limitations/implications

Cross-sectional data cannot infer causality, and the Canadian sample may not be generalizable to other countries given that an economic downturn occurred at time of data collection. Research should continue to investigate how individuals establish initial salary expectations, while also testing more dynamic models given the interaction effect found in terms of gender and work values in explaining salary expectations.

Practical implications

The majority of the gender gap in peak salary expectations can be explained by what men and women expect to earn immediately after graduation. Further, women and men have different perceptions of the value they attribute to the labor market and what might be a fair wage, especially when considering beta work values.

Social implications

The data suggests that the gender-wage gap is likely to continue and that both young men and women would benefit from greater education and information with respect to the labor market and what they can reasonably expect to earn, not just initially, but from a long-term perspective.

Originality/value

This study is the first to simultaneously investigate five theoretical explanations for the gender gap in pre-career expectations.

Details

Career Development International, vol. 19 no. 4
Type: Research Article
ISSN: 1362-0436

Keywords

Open Access
Article
Publication date: 31 August 2017

Fatah Behzadian and Naser Izadi Nia

In this research, using an analytical framework on factors affecting the quality of auditing services, we consider factors that affect an expectations gap in providers and…

Abstract

In this research, using an analytical framework on factors affecting the quality of auditing services, we consider factors that affect an expectations gap in providers and users of auditing services related to factors affecting auditing quality. Effective factors studied in this regard are professional features, including the professional role of individuals in the auditing process (auditors against preparers of financial statements), professional experience of individuals, professional rating and size of auditing firms. The first statistical society consists of certified public accountants (CPAs) working in the auditing organization and audit firms in Iran, and the second statistical society consists of all investment companies that operate under the supervision of the Tehran Stock Exchange Organization. Based on the results of the research, the role of professionals in the auditing process is not effective as an independent auditor or financial statements provider, as well as the professional experience of individuals in the expectations gap from factors affecting auditing quality, while the size and qualities of the auditing firms were influenced by the expectations gap of individuals in the field of auditing regulation.

Details

Asian Journal of Accounting Research, vol. 2 no. 2
Type: Research Article
ISSN: 2459-9700

Book part
Publication date: 14 December 2004

Kimberly Gladden Burke, Stacy E. Kovar and Penelope J. Prenshaw

The importance of alignment between users’ and providers’ expectations of accounting services has long been recognized as paramount in the auditing profession. The…

Abstract

The importance of alignment between users’ and providers’ expectations of accounting services has long been recognized as paramount in the auditing profession. The importance of expectations, and especially expectations gaps, is even more compelling for new assurance services, where the importance of marketing the service is pronounced. This paper develops the Assurance Gaps Model, which describes expectations gaps in general, defining these holistic differences between users’ and providers’ perceptions of assurance services as assurance gaps. The model suggests that assurance gaps really have a number of components – expectations, evaluations of performance and disconfirmation – all of which impact users’ satisfaction with the service. The magnitude of each of these components, as well as the emphasis placed on each one, is important in describing the nature of the gap. This model is consistent with previous research in auditing as well as a large body of research in marketing studying expectations and the satisfaction process (Oliver, 1997). To illustrate potential applications of the Assurance Gaps Model, hypotheses are developed and tested using an online simulation of the ElderCare assurance service proposed by the AICPA/CICA. Results indicate that users and providers demonstrate similar magnitude of each of the factors in the model, but differ in that users emphasize performance in forming satisfaction judgments while providers emphasize expectations. The study and results illustrate the usefulness of the model for performing detailed analysis of assurance gaps and for suggesting appropriate courses of action to manage the factors that contribute to them.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84950-280-1

Article
Publication date: 1 April 2022

Charles Kalinzi, Joseph Mpeera Ntayi, Levi Bategeka Kabagambe, Moses Muhwezi and John Kigozi Munene

This paper aims to quantify, for the first time, the performance expectations gap in community roadworks projects by proposing a performance expectations gap index (PEGI…

Abstract

Purpose

This paper aims to quantify, for the first time, the performance expectations gap in community roadworks projects by proposing a performance expectations gap index (PEGI) that can answer a vital question of how wide/how narrow the gap is from a stakeholder perspective. Previous scholars have offered qualitative descriptions of the expectations gap from an auditing point of view using a constructivist approach. This study uses a positivistic approach in addressing the procurement performance expectations gap.

Design/methodology/approach

The index is computed by combining data from actual and perceived performance of public roadworks from two categories of respondents: “Technical personnel” and “Road users” in selected District Local Governments (DLGS) of Uganda using paired mean differences. The authors created grand means from these two groups for us to make a meaningful comparison. Data were collected from community access roads projects opened, maintained and completed and the satisfaction levels from 69 DLGS. The community leaders and political representatives formed a group of road-users, whereas DLG Engineering staff represented the technical staff. Data was collected on the extent to which the DLG had achieved performance efficiency, performance effectiveness and performance reasonableness. The measurements items was anchored along the continuum of: (5) Outstanding = Performance is consistently superior to (1) Unsatisfactory = Performance is consistently unacceptable.

Findings

Study findings show the level of performance of roadworks attained by technical staff is only 65%, with 15.9% gap is attributed to performance efficiency, the 29.1% gap is attributed to performance effectiveness issues and 20% gap is the perceived performance unreasonableness gap in the stakeholder’s perspective, creating an overall performance gap of 35%, in the perspective of road users. From the computations carried out, the authors determined the size of the expectation gaps by the technical DLG stakeholders and road-users of 0.3493. The gap index (0.3493) falls within the range between 0.2 and 0.39, which is a small performance expectations gap, calling for top management’s attention to identify and work on the parameters causing operational inefficiency within implementing units of DLGs. Study findings show the level of performance of roadworks attained by technical staff is 65%, creating a performance gap of 35%, in the perspective of road users.

Research limitations/implications

The implications of these results can ignite a meaningful debate on whether financing of road projects should be based on how narrow the performance gap should be and having sustained evidence that the gap is progressively being narrowed for improved sustainability of roadworks financing by donor agencies. Whereas this quantification of the performance gap is a new positivistic direction towards minimizing the performance expectation gap, it can easily be adopted by roadworks implementing units in assessing road-user performance needs at the point of project completion and once these are not achieved, such minor loopholes would be worked on, on a regular basis as and when need warrants.

Practical implications

The authors have introduced and empirically verified the performance expectation gap index, which further understands the performance expectations gap from a positivistic approach. The paper provides a problem-solving tool to analyse stakeholder engagement linkages with performance expectations variations on the practical side.

Social implications

The paper has started on a change perception campaign of shaping road-user critical perspectives about the outcome of community roadworks procurements. By introducing and creating a mindset of quantitative assessments in understanding the expectation gaps that can be caused by a number of factors, the responsible people for creating, maintaining and widening PEGs will eventually wake up and improve personal behaviours that lead to the widening of the procurement performance gap in roadworks, from a stakeholders’ perspective.

Originality/value

Unlike previous scholars who used a constructivist approach, the paper is the first of its kind to use a positivistic approach to quantify the procurement performance expectations gap using a PEGI. The use of the index gives new insights to managing procurement performance expectations to the satisfaction of stakeholders from a quantitative perspective.

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