Antecedents and consequences of audit expectation gap

Noghondari, Amirhossein Taebi; Foong, Soon‐Yau

doi:10.1108/02686901311327182

Cited by 7 publications

(4 citation statements)

References 51 publications

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“…Although Level 2 means that between 10 and 50 per cent of the reporting scope has been assured and that the reliability of 80 per cent of the data can be certified, such an assurance level statement is neglected by financial analysts. Consistent with prior research on the audit expectation gap (Koh and E-Sah, 1998; Noghondari and Foong, 2013; Ruhnke and Schmidt, 2014), assurance Level 2 appears to be insufficiently understandable to investors. Furthermore, the content of the assurance statement is subject of unresolved debates (Cohen and Simnett, 2015).…”

Section: Discussionsupporting

confidence: 70%

Does the level of assurance statement on environmental disclosure affect investor assessment?

Rivière-Giordano

Giordano-Spring

Cho

2018

SAMPJ

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Purpose The purpose of this study is to examine whether different levels of assurance statements of environmental disclosures affect investment choices in the French context where environmental assurance was voluntary until 2012 and became regulated and mandatory since then. Design/methodology/approach The authors conducted an experiment during the voluntary context – which represents the vast majority of countries – on a sample of 108 financial analysts. Findings Environmental disclosure has a positive impact on investment recommendations. More surprisingly, financial analysts are less likely to give recommendations in favor of a company that displays environmental disclosure with low-level assurance than for a company with no assurance statement at all. Research limitations/implications When assurance is voluntary and there are at least two levels, this study results suggest that firms should avoid selecting the lowest level of assurance because it negatively affects investor decisions. From this perspective, firms should devote sufficient effort and resources to obtain at least Level 2 environmental disclosure assurance. Practical implications Given the recommendations made by financial analysts, the authors could expect that firms may prefer to engage in a higher level of assurance or to provide no assurance rather than minimize their financial efforts and resources to select a lower level of voluntary assurance regarding environmental disclosure. Social implications This study has implications for the voluntary assurance practices of environmental disclosure and can provide support to regulators to promote higher standards in environmental assurance. It documents the relevance to increase the level of requested assurance for environmental disclosure. Originality/value To the best of the authors’ knowledge, very few studies have examined the additional effect of assurance on environmental disclosure in investors’ decisions. The experiment is conducted with financial analysts in the context of voluntary assurance.

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Section: Discussionsupporting

confidence: 70%

Does the level of assurance statement on environmental disclosure affect investor assessment?

Rivière-Giordano

Giordano-Spring

Cho

2018

SAMPJ

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“…Indeed, there exists contemporary studies that attempted the reduction of the expectation gap (Noghondari & Foong, 2013) through their proposals and recommendations. However, despite the long list of such propositions and, not to forget, institutional modifications, convincing evidence that proves the persistent existence of the gap is still circulating (Ruhnke & Schmidt, 2014;Noghondari & Foong, 2013).…”

Section: Audit Expectation Gapmentioning

confidence: 99%

“…According to Noghondari and Foong (2013), there are contemporary studies that show the attempt to reduce and bridge the expectation gap, but even with their propositions and institutional modifications, Noghondari and Foong (2013), along with Ruhnke and Schmidt (2014), found a convincing evidence that proves that the existence of the gap is still circulating.…”

Section: Theme 3: Audit Digitalization's Effect On Audit Expectation Gapmentioning

confidence: 99%

Shift to Digital Audit: A Study Investigating the Benefits and Challenges of Digitalization on the Audit Profession

Angeles,

Mabazza,

Pascua

et al. 2023

AJMA

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This study intends to evaluate the perceived benefits and challenges that these technologies offer in the context of digitalization, to one of the most suitable professions for the particular procedure; the audit profession. A qualitative study was conducted to gain a better grasp of the implications of digitalization on audit tools in the audit profession. This is accomplished by conducting ten (10) semi-structured interviews with professional auditors, emphasizing interpretation. It has been found that this study backs up some of the conclusions of prior research on the issue of digital auditing. Conclusively, the empirical findings of this study support the assumption that auditors believe digitalization will become even more popular in the future and that it will not result in job losses, as prior studies have suggested.

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“…As noted in Quick's (2020) recent review of the expectation gap literature, recent studies suggest that these differences in perceptions still persist between different stakeholder groups across many countries. For example, studies have been conducted in China (Lin and Chen 2004), Barbados (Alleyne and Howard 2005), Egypt (Dixon, Woodhead, and Sohliman 2006), Australia (Schelluch and Gay 2006), Lebanon (Sidani 2007), Saudi Arabia (Haniffa and Hudaib 2007), Netherlands (Hassink, Bollen, Meuwissen, and De Vries 2009;Litjens, van Buuren, and Vergoossen 2015), Bangladesh (Siddiqui, Nasreen, and Choudhury-Lema 2009), Iran (Noghondari and Foong 2013), UK/New Zealand (Porter, Ó hÓgartaigh, and Baskerville 2012), Germany (Ruhnke and Schmidt 2014), and the USA (DiGabriele 2016), with the majority of these studies noting specific differences in how various stakeholders view the auditor's role in detecting fraud.…”

Section: (A) What Do You Think Is the Main Cause Of The Expectation Gap Relating To Fraud And Going Concern In An Audit Of Financial Statmentioning

confidence: 99%

Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the Discussion Paper: Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences between Public Perceptions about the Role of the Auditor and the Auditor's Responsibilities in a Financial Statement Audit

Schaefer¹,

Brown²,

Ege³

et al. 2021

Current Issues in Auditing

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We commend the International Auditing and Assurance Standards Board (the Board) on its efforts to determine “whether the auditing standards related to fraud and going concern need to be updated to reflect the rapidly evolving external reporting landscape.” We especially commend the Board on the timeliness of the call for input into these issues in that there is sufficient time to conduct research to further inform questions raised in the Discussion Paper and the questions that will inevitably arise as deliberations continue and progress is made on the project. We note below insights from the extant research literature as they relate to the questions posed in the Discussion Paper, but there remain many unanswered questions. We believe that many members of the Auditing Section of the American Accounting Association stand ready to work with the Board and other stakeholders to inform deliberations in this area.

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Antecedents and consequences of audit expectation gap

Cited by 7 publications

References 51 publications

Does the level of assurance statement on environmental disclosure affect investor assessment?

Does the level of assurance statement on environmental disclosure affect investor assessment?

Shift to Digital Audit: A Study Investigating the Benefits and Challenges of Digitalization on the Audit Profession

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