The expectation gap: perceptual differences between auditors, jurors and students

Abstract

The expectation gap has been presumed to be caused by the differing perceptions of the accounting profession and third parties regarding the profession’s role, responsibilities, and related performance. Prior research regarding the expectation gap has focused on diverging perceptions of different groups (i.e. financial analysts, bank loan officers, small business owners, and auditors). While this research has identified an expectation gap between auditors and certain third parties, it has neglected examining the perceptions of judicial third parties. This absence is somewhat ironic given the role that jurors and judges play in determining auditors’ legal liability. This void is filled by comparing jurors’, auditors’, and accounting students’ attitudes towards the accounting profession. Results reveal a large divergence in perceptions of auditors and jurors regarding their expectations of the accounting profession. However, accounting students responded in a manner very similar to practicing auditors.

Auditor liability: A comparison of judge and juror verdicts

“…unfavorable attitudes) significantly influenced their liability assessments. On the other hand, research also shows jurors in general hold auditors to high performance standards and view their role as that of a public watchdog with ''deep pockets'' to insure against large stockholder losses which can mean liability for auditors even when the auditing standards are followed (Frank et al, 2001). We expect these extralegal factors, the attitudes of judges and jurors towards the auditing profession, to serve a critical role in the liability decision process of the participants and may partially explain the impact of the interactive effect predicted in H1 on the assessments of liability.…”

Corporate fraud and the audit expectations gap: A study among business managers

“…Gaps concerning the auditor's role in detecting fraud have been proven highly significant by many authors (Alleyne & Howard, 2005;Best et al, 2001;Dixon et al, 2006;Epstein & Geiger, 1994;Fadzly & Ahmad, 2004;Frank, Lowe, & Smith, 2001;Haniffa & Hudaib, 2007;Humphrey et al, 1993;Lin & Chen, 2004;Lowe, 1994;McEnroe & Martens, 2001;Sidani, 2007). In previous studies, the questions regarding fraud are commonly restricted to single statements such as "One role of an external auditor is to actively search for fraud, no matter how small" (Sidani, 2007, p. 297); "The auditor is responsible for detecting all fraud" (Best et al, 2001, p. 139;Dixon et al, 2006, p. 298); or "A CPA must be responsible for detecting and reporting errors and frauds in an audit engagement" (Lin & Chen, 2004, p. 103).…”

“…The fact that our study focuses on fraud situations also affects the selection of respondents. The extant literature on the expectations gap surveyed users from very diverse groups, including investors (Fadzly & Ahmad, 2004), bankers (Best et al, 2001), financial directors (Haniffa & Hudaib, 2007), senior management (Alleyne & Howard, 2005), investment analysts (Haniffa & Hudaib, 2007;Humphrey et al, 1993), educators (Lin & Chen, 2004), government officials (Haniffa & Hudaib, 2007;Lin & Chen, 2004), brokers (Fadzly & Ahmad, 2004), credit managers (Haniffa & Hudaib, 2007), judges (Lowe, 1994) and jurors (Frank et al, 2001). Investors and bankers are by far the most studied user group.…”

Boards of Directors and Firm Performance: is there an expectations gap?

“…In relation to audit expectation gaps, the parties are auditors on the one hand, and financial statement users (Alleyne and Howard, 2005), audit interest groups (Porter, 1993), jurors and students on the other hand (Frank, Lowe and Smith, 2001). McEnroe and Martens (2001) compare the perceptions of audit partners and investors.…”