Audit Expectation Gap in the External Audit of Banks in Mozambique

Osvaldo Massicame, Helena Coelho Inácio () and Maria Anunciação Bastos
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Osvaldo Massicame: Faculty of Economics, Eduardo Mondlane University, Maputo 257, Mozambique
Helena Coelho Inácio: Higher Institute for Accountancy and Administration, University of Aveiro, 3810-193 Aveiro, Portugal
Maria Anunciação Bastos: Higher Institute for Accountancy and Administration, University of Aveiro, 3810-193 Aveiro, Portugal

IJFS, 2023, vol. 11, issue 4, 1-22

Abstract: The function of the external audit, largely as a result of the scandals and financial crises that have occurred, has been the subject of debate and criticism. This aspect has fostered discussions around the Audit Expectation Gap, which, in short, is understood as the differences in expectations between the audit’s results and what is expected from it. In this context, the present study aimed to evaluate the existence of the Audit Expectation Gap in the external audit of banks in Mozambique. For this purpose, auditors, regulators/supervisors, managers and financial staff from banks and companies were surveyed. The results showed statistically significant differences in the opinions of respondents regarding matters related to the scope and objective of the audit, materiality and risk, and different aspects of responsibility. Thus, evidence was obtained that, in addition to reviewing audit regulations for Mozambican credit institutions and financial companies, there is a need for clarification of matters such as the level of security in external audits (which cannot be absolute); the responsibilities of management and auditors in areas such as assessing and reporting compliance with the ratios and prudential limits imposed by the Bank of Mozambique; assessing the suitability of risk management at the bank; and the prevention, detection and reporting of fraud.

Keywords: audit; stakeholders; expectation; banks; Mozambique (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
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