This document discusses the audit expectation gap, which is defined as the difference between what the public expects auditors to accomplish and what auditors can actually and reasonably achieve given the scope and limitations of an audit. The summary discusses three key points: 1) The audit expectation gap is complex and influenced by many factors, including changes in the business environment, regulations, and stakeholder expectations. It arises from inherent differences between what stakeholders expect and auditors' actual roles and responsibilities. 2) There are three components of the audit expectation gap: the knowledge gap, which involves a lack of understanding about the audit's purpose and limitations; the performance gap, which relates to perceptions of auditors not meeting standards; and the evolution

1. AUDIT EXPECTATION
ISSUES: AUDITOR'S AND
EXPECTATION GAP
9.1 Definitions & Issues
9.2 Nature of the Gap
Presented By:
NURUL IZZAH IZZATI BINTI ROSLI 830676

2. CONTENT
Introduction
Nature of the Gap
Issues
Auditors Duties
Components of Audit Expectation
Gap
Consequences
Conclusion

3. INTRODUCTION
The term “expectation gap” was first applied to auditing by Liggio (1974).
The difference in the perception of the users and auditors regarding the level of
performance exhibited by the auditors in the course of their work.
Liggio
Cohen
Commission
The difference that may exist between what the public expects and what the
auditors can reasonably achieve
Porter
The gap between the society's expectations of the auditors and the performance of
the auditors.
Salehi
The differences in opinion on actual performance and expected performance of
auditors and public expectations may be summarized as a safety net, a burglar alarm
system, radar system and consistent communication which goes against the core
principles of auditing.
Ojo The differences between what the users of financial statements perceived an audit to
be and what the audit profession claim is expected of them in conducting an audit
Onulaka
The differences between what the public and users of financial statements believe the
responsibilities of auditors should be and what the auditors believe their
responsibilities are

4. NATURE OF
THE AUDIT
EXPECTATION
GAP
The nature is complex and varied
AEG influenced by many factors -
change in business environment, new
regulations and stakeholder
expectations
Arising from the inherent differences
which are the differences in the
expectations of stakeholders and the
actual role and responsibilities of
auditors in the audit process.
Inherent limitation - Prevent auditors
from giving absolute assurance

5. AUDIT EXPECTATION
ISSUES
Lack of Understanding
Perceived lack of auditor
independence
Complexity of financial
reporting
Lack of communication
Limitation of audit

7. Communicating the scope and
limitation of the audit
Maintaining auditor independence
and objectivity
Applying auditing standards
consistently
Enhancing audit quality
Documenting the audit process
DUTIES AND
RESPONSIBILITIES
OF AUDITORS

8. COMPONENTS OF AUDIT
EXPECTATION GAP
Knowledge
Gap
Performance
Gap
Evolution
Gap

9. KNOWLEDGE
GAP
the difference between what the public thinks auditors do
and what the auditors actually do
general public might misunderstand auditors
lack of understanding or knowledge by stakeholders
about the purpose, scope and limitation of audit

10. PERFORMANCE
GAP
the gap between what society can reasonably expect auditors
to accomplish and what auditors are perceived to achieve
focus on areas where auditors do not comply with audit
standards or rules
can be divided into 'deficient standard' and 'deficient
performance'

11. EVOLUTION
GAP
the gap that occurs when the expectations of stakeholders have
evolved over time, but the auditing standards have not kept
pace with these changes
lead to unrealistic expectation
focus on areas need for evolution based on the general public
demand, technological changes and where the overall audit
process can be improved

12. CONSEQUENCES OF
EXPECTATION GAP IN
AUDIT
reduced trust and confidence
increased litigation and regulatory
action
damage reputation
reduced investment
increased audit cost

13. CONCLUSION
The concept of an audit expectation gap suggests that the
public expects auditors to act in ways which are different
from what auditors themselves would expect to act. They
would have a higher expectation on the auditors. The AEG
primarily arose from the unreasonable expectation of the
users due to their lack of understanding on the roles of
auditors which is consistent with the role conflict theory

14. REFERENCES
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Salehi. M. (2011) Audit Expectation Gap Concept, Nature and Trace. African
Journal of Business Management, 5, 8376-8392.
https://doi.org/10.5897/AJBM11.963
Chye Koh, H. and Woo, E. (1998), "The expectation gap in auditing", Managerial
Auditing Journal, Vol. 13 No. 3, pp. 147-154.
https://doi.org/10.1108/02686909810208038
Quick, R (2020), "Maandblad Voor Accountancy en Bedrijfseconomie
94(1/2):5-25. DOI 10.5117/mab.94.47895
Olagunju, Adebayo, Leyira, Micah Christian, Audit Expectation Gap:
Perspectives of Auditors and Audited Account Users, International Journal of
Development and Management Review (INJODEMAR) Vol. 7 June, 201

15. THANK YOU