An investigation of the expectation gap in Egypt

R. Dixon, A.D. Woodhead and M. Sohliman

Managerial Auditing Journal, 2006, vol. 21, issue 3, 293-302

Abstract: Purpose - Investors and financial statement users may have differing beliefs about the responsibility of an independent accounting firm performing an audit of a client's financial statements. This study aims to investigate the existence of an audit expectation gap between auditors and financial statement users in Egypt. Design/methodology/approach - The research method adopted in this study is identical to that used by Schelluch, Bestet al.and Fadzly and Ahmed. Findings - The results found evidence of a wide audit expectation gap in Egypt in the areas of auditor responsibilities for fraud prevention, maintenance of accounting records, and auditor judgment in the selection of audit procedures. To a lesser extent, an expectation gap was found concerning the reliability of audit and audited financial statements, and the usefulness of audit. Research limitations/implications - The different economic and cultural conditions in Egypt may restrict the generalisability of this study. Practical implications - In order to reduce the expectation gap and improve decision‐making by financial statement users, the results of this study support the adoption of the long‐form audit report, augmentation of the auditing framework, strengthening of the auditor's integrity, and finally educating users on the nature and functions of audit. Originality/value - This paper contributes to the understanding of the diverse nature of the expectations gap by examining the different economic and cultural setting of Egypt.

Keywords: Auditing; Financial reporting; Expectation; Egypt (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:02686900610653026

DOI: 10.1108/02686900610653026

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