The audit expectations gap—plus ca change, plus c'est la meme chose?

The consideration of environmental matters in the audit of financial reports

“…Power (1993, p. 195) further added that the words used in such guidance, though acceptable to regulators, prevents external definitions of key concepts, thus maintaining a "zone of discretion" for auditors. Such a strategy is perhaps one of doing 'nothing' (Briloff, 1990;Fogarty et al, 1991;Humphrey et al, 1992). This strategy used in promulgating an audit standard or guidance statement gives the appearance of "addressing issues seriously, but without altering the status quo" (Lee, 1994, p. 40).…”

“…The debate on the audit expectation gap has been around for more than one hundred years (Humphrey et al, 1992). The term 'audit expectation gap' is used to describe the difference between the public's expectation of auditors and the auditors' actual performance (Gray & Manson, 2005).…”

“…These studies suggest that auditors' performances are not in accordance with the wishes of those who requested them (Humphrey et al, 1992;Humphrey et al, 1993b). Simunic (1994) suggested that audit guidance on the consideration of environmental matters in the audit of a financial report is a response to the expectation gap between auditors and financial statement users.…”

“…Simunic (1994) suggested that audit guidance on the consideration of environmental matters in the audit of a financial report is a response to the expectation gap between auditors and financial statement users. Other commentators have identified technical competencies, precise responsibilities of auditors; the limits of audit function, the adequacy of audit standards and the quality of audit delivery as issues central to the debate on the audit expectation gap (Humphrey et al, 1992;Swift & Humphrey, 2000b). These issues are further complicated by Hines' (1989) argument that audit work is based, not on a body of auditing knowledge only, but also on claims, or at least the appearance, of auditing knowledge embodied in audit standards and guidance statements.…”

“…Such audit standards and guidance statements are thought by some to represent practice in auditors' interest instead of providing a rigid standard of acceptable performance (Booth & Cocks, 1989). In view of this, Humphrey et al (1992) argued that the promulgation of audit standards and guidance statements gives "an appearance of standardisation and a rationalistic basis to audit expertise" although they note that details about standard promulgations are insufficient to gauge the nature of audit expertise and audit performance (Humphrey et al, 1992, p. 148). Thus, organisational influence on audit standards and guidance statements is questionable, and made further so by the standard or statements' use of subjective terms such as "reasonable, materiality, adequacy, relevance, reliability, sufficiency and judgement" (Humphrey et al, 1992, p. 48).…”