Investigation of Expectation Gap between Auditors and Investors in Bangladesh

Abstract

The goal of this study is to determine the variable(s) that is/are sources of audit expectation gap between auditors and individual investors (i.e., financial statement users) in Bangladesh. The variables used are Internal Control, Fraud Detection, Appropriateness in using accounting numbers and lastly Reliability. In this research the sample size was selected purposively, a total of 30 auditors were selected from different audit firms in terms of firm’s size, revenue, and practices again a total of 30 investors were selected purposively. A structured format of questionnaire was used where the response options were predetermined to acquire information directly from auditors and investors. The questionnaires consist of two sections, first section collected demographic data and second section enclosed 12 semantic differential belief statements. Same questionnaire was given to two independent sample groups (auditors and investors) to identify expectation gaps. To identify the variable(s) that are the cause of the audit expectation gap, the statistical approach “Independent sample t-test” was used. The disparity between auditor and investor in two variables, internal control, and reliability, is discovered in this study. The reasons behind these gaps are lack of proper educational practices and lack of understanding regarding audit norms and practices. These gaps can be reduced by giving adequate knowledge, awareness, and fair practices by the auditors to the financial users.