The audit expectation gap: perceptual differences between auditors, preparers and users

The expectations gap has been presumed to be caused by the differing perceptions of the accounting profession and third parties regarding the professional roles. responsibilities, and related performance. Prior research regarding the expectations 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, management. credit analysts, financial analysts, and shareholders (individual investors). The motivation for performing this research is to empirically investigate the extent of audit expectations gap in existence in Tanzania. The results found evidence of a wide expectation gap in Tanzania in the areas of auditors' responsibility for fraud prevention and searching for frauds and irregularities, the role of auditors as a public watchdog, the auditor to inform appropriate regulatory authority for any significant malpractice. Furthermore gaps exist with regard to auditors been liable for anything regardless its materiality, the auditors report on insider dealing to regulatory authority. Moreover auditors report were viewed as being too brief to worth the fees claimed, and auditors guaranteeing that no material fraud in the audited report. Other views were that auditors are concerned too much with keeping management happy, and that auditors do not understand the problem of the clients and the internal audit as an effective protection against fraud. The major recommendations on how the gap can be narrowed includes, expanding audit report, education, expansion of auditors' responsibilities, enhancement of the auditors' independence and others.