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User knowledge and audit expectations gap in Sri Lanka

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dc.contributor.author Manatunga, Kalinga P. en
dc.date.accessioned 2010-03-15T02:54:37Z
dc.date.issued 2003 en
dc.identifier.uri https://hdl.handle.net/10182/1483
dc.description.abstract The widespread criticism and litigation against auditors has frequently been attributed to the existence of an expectations gap between the auditing profession and the public. An audit expectations gap is said to exist when there are differences in the beliefs of auditors and the public about the duties and responsibilities of auditors, and the meaning of messages conveyed by the audit report (Monroe & Woodliff, 1994). Researchers suggest that the gap is attributable to both unreasonable public expectations (the reasonableness gap) and inadequate auditor performance (the performance gap), whether due to deficient auditing standards (deficient standards gap) or substandard auditor performance (deficient performance gap) (Porter, 1993). Most prior studies have investigated the expectations gap phenomenon in a developed country context. This study extends the generalisability of prior studies by investigating whether a reasonableness expectations gap is evident in Sri Lanka -a developing country. In particular, the study determines whether significant differences can be observed between auditors and the other groups, with regards to the role, objectives, and limitations of an external audit, and the message(s) conveyed in the audit report. The Institute of Chartered Accountants of Sri Lanka has asserted that an expectations gap does exist in Sri Lanka, and that unreasonable user expectations are primarily to blame. This study aims to provide evidence useful in assessing the validity of the claims of the Sri Lankan accounting profession. Further, the study investigates whether the extent of the reasonableness gap is influenced by level of audit sophistication (knowledge) amongst non-auditor subjects. A smaller reasonableness gap is expected to be associated with sophisticated groups (e.g., managers, accountants, bankers, lawyers) relative to less sophisticated groups (e.g., private shareholders and students). This study is not concerned with issues relating to the setting of audit regulations, adequacy of the standards or the performance of the audit profession, but with the communication and understanding of current regulations and the intended meaning of unqualified audit report. The data for the study are collected by means of a self-administered questionnaire, which comprised of semantic differential belief statements. The survey included auditors, students, bankers, lawyers and preparers of financial statements. The results confirmed the existence of an audit expectations gap in Sri Lanka and suggest that the degree of audit sophistication amongst non-auditors is associated with the degree of unreasonable audit expectations. The study found that differences in the perceptions of non auditors and auditors concerning the auditor's responsibilities for fraud detection and reporting; and the meaning of the unqualified audit report, were important determinants of the extent of the unreasonableness gap. Contributing somewhat less to the unreasonableness gap were differences in perceptions concerning the auditor's responsibility for maintaining accounting records and the view that an unqualified audit report assures that entity is being run efficiently. en
dc.language.iso en en
dc.publisher Lincoln University en
dc.subject Sri Lanka en
dc.subject auditing en
dc.subject financial reporting en
dc.subject fiscal balance en
dc.subject audit expectations gap en
dc.subject auditing standards en
dc.subject audit procedures en
dc.subject accounting en
dc.subject fraud detection en
dc.subject audit report en
dc.subject surveys en
dc.title User knowledge and audit expectations gap in Sri Lanka en
dc.type Thesis
thesis.degree.grantor Lincoln University en
thesis.degree.level Masters en
thesis.degree.name Master of Commerce and Management en
dc.subject.marsden Fields of Research::350000 Commerce, Management, Tourism and Services::350100 Accounting, Auditing and Accountability en
lu.contributor.unit Lincoln University en
lu.contributor.unit Faculty of Agribusiness and Commerce en
lu.contributor.unit /LU/Faculty of Agribusiness and Commerce/ACCT en
pubs.organisational-group /LU
pubs.organisational-group /LU/Faculty of Agribusiness and Commerce
pubs.organisational-group /LU/Faculty of Agribusiness and Commerce/ACCT
pubs.publication-status Published en
dc.publisher.place Lincoln, Canterbury en


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