The Current Status of Auditors’ and Investors’ Perceptions of the Audit Expectation Gap

Journal of Accounting, Ethics and Public Policy 23(1): 13-63 (2022)

51 Pages Posted: 4 Apr 2022

See all articles by Wendy Heltzer

Wendy Heltzer

DePaul University - College of Commerce

John E. McEnroe

DePaul University

Mary Mindak

DePaul University

Date Written: February 11, 2022

Abstract

Throughout this study the term “expectation gap” refers to the difference between (1) what the public and financial statement users believe the responsibilities of auditors to be, and (2) what auditors believe their responsibilities are, as in McEnroe and Martens, 2001 (hereafter MM 2001). Approximately 20 years have elapsed since MM 2001 and much has happened in the area of audit failures (i.e. Enron, WorldCom) as well as perceived enhancements (i.e. Sarbanes-Oxley Act). We replicate MM 2001 in order to measure the impact of such events on the expectation gap through analyzing survey responses from auditors, investors, and CFOs. Our findings indicate that two expectation gaps identified by MM 2001 still exist; we believe they can be addressed and perhaps eradicated with educational measures. Our findings additionally indicate that four expectation gaps documented in MM 2001 have been eliminated over time, suggesting that auditors’ perceptions of their role, especially in the area of detecting fraud, has been enhanced.

Keywords: expectation gap, attest function, auditor opinion

JEL Classification: H83, M41, M42, M48, K22

Suggested Citation

Heltzer, Wendy and McEnroe, John E. and Mindak, Mary, The Current Status of Auditors’ and Investors’ Perceptions of the Audit Expectation Gap (February 11, 2022). Journal of Accounting, Ethics and Public Policy 23(1): 13-63 (2022), Available at SSRN: https://ssrn.com/abstract=4032500

Wendy Heltzer

DePaul University - College of Commerce ( email )

Chicago, IL
United States

John E. McEnroe

DePaul University ( email )

School of Accountancy & Mgmt. Information Systems
1 East Jackson Blvd.
Chicago, IL 60604
United States
312-362-8748 (Phone)

Mary Mindak (Contact Author)

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
193
Abstract Views
681
Rank
289,897
PlumX Metrics