Effects of Audit Education and Work Experience on Audit Expectation Gap in Nigeria
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Abstract
The duties which auditors perform in establishing the credibility of management stewardship function have often been misconceived by users of financial statements. This wrong perception is evidently the cause of misjudgement and unending blame heaved on auditors and the accounting profession in all reported cases of corporate failures. This study investigated the extent to which audit education and work experience minimize audit expectation gap in Nigeria. The quasi-experimental non-equivalent group design was adopted using three intact groups of accounting students from three tertiary institutions in Abia State. A modified four-point likert questionnaire which covered important issues of audit expectation gap was administered to a sample of 353 students at the end of 2012/2013 academic session. Multiple regression and ANOVA were used in analyzing the data. And results show that perceptions of students without audit education and those with work experience significantly differ from those of students who have audit education, whereas the difference in the perceptions of students without audit education and those with work experience is not statistically significant. The study also observed that audit education has an inverse effect on audit expectation gap to a greater extent than work experience. Therefore, the study concludes that audit education is a major tool for the reduction of audit expectation gap and recommends that the relevant authorities should install appropriate legal frameworks and campaigns for increasing financial information users’ knowledge and awareness of the nature, process, scope and limitations of an audit through proper audit education programmes.
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References
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Adeyemi. S. B., & Uadiale, O. M. (2011). An empirical investigation of the audit expectation gap in Nigeria. African Journal of Business Management,5(19), 7964-7971.
Akpotu, C., & Omesi, I. (2013). External auditors’ unethical behaviour and corporate business failure in public owned organizations in Nigeria. International Journal of Business and Management Invention, 6, 12-18.
Bailey, K. E, Bylinsky J. H & Shields M. D (1993). Effect of audit report wording changes on the perceived message. Journal of Accounting Research,4, 355-370.
Best, P.J., Buckby, S., & Tan, C. (2001).Evidence of the audit expectation gap in Singapore. Managerial Auditing Journal, 16(3), 134-144.
Brown, R. (1962). Changing audit objectives and techniques. The Accounting Review, 37(4), 696-703.
Cook J. W and Winkle G. M (1976). Auditing – Philosophy and Techniques. USA: Houghton Mifflin Education
Dewing, I.P., Russell, P.O. (2002). UK Fund Managers, Audit Regulation And The New Accountancy Foundation: Towards A Narrowing Of The Audit Expectation Gap. Managerial Auditing Journal, 17(9), 537-545.
Epstein, M.J. and Geiger, M.A. (1994).Investor views of audit assurance: Recent evidence of the expectation gap, Journal of Accountancy, 10, 60-66.
Flint, D. (1988). Philosophy and principles of auditing. Hampshire: MacMillan
Fowzia, R. (2011). An empirical study on audit expectation gap: role of auditing education in Bangladesh. Retrieved from https://mpra.ub.uni-muenchen.de/22708/Munich Personal RePEc Archive
Füredi-Fülöp J. (2015). An empirical study of audit expectation gap in Hungary. Club of Economics in Miskolc, 11(1) 37-46. Retrieved from http://dx.doi.org/10.18096/TMP.2015.01.04
Gill, G., & Cosserat, G. (1996).Modern auditing in Australia (4th ed.). Austrailia: John Wiley & Sons.
Haniffa, R., and Hudaib, M. (2007).Locating audit expectation gap within a cultural context: the case of Saudi Arabia. Journal of International Accounting, Auditing and Taxation.19,179-206.
Humphrey, C., Mozier, P., &Turley, S. (1993), The audit expectation gap in Britain: an empirical investigation. Accounting and Business Research, 23(91A), 395-411.
Humphrey, C.G., Moizer, P., &Turley, W.S. (1992). The audit expectations gap - plus ça change, plus c’est la même chose. Critical Perspectives on Accounting. 3, 137-161.
Ihendinihu J. U & Robert S.N (2014) Role of Audit Education in Minimizing Audit Expectation Gap (AEG) in Nigeria. International Journal of Business and Management,9(2), 203-211.
Institute of Chartered Accountants of England and Wales (ICAEW) (2005) Audit Quality, Agency Theory and the Role of Audit. Audit Quality Forum Retrieved March 16, 2014, from www.icaew.co.uk/auditquality
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Issahaku S., & Muntari M. (2015).The evaluation of evidence of the audit expectation gap in Ghana. Research Journal of Finance and Accounting,6(24), 20 – 30.
Israel, G. D. (1992). Determining sample size. Agricultural Education and Communication Department, UF/IFAS Extension, University of Florida US. Retrieved January 6, 2014, from http://edis.ifas.ufl.edu/
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Lee, J. (1986). Government auditing in China. The Journal of Accountancy, 62,190.
Lee, T. (1994). Corporate audit theory. London: Chapman & Hall.
Lee, T. H & Azham, M.A (2008).The Evolving Role of Auditors: Where Do We Go from Here? Accountants Today, 3, 18-22
Leung, P., Coram, P., Cooper, B., Cosserat. G. & Gill, G. (2004).Modern auditing & assurance service (2nd ed.).Australia: John Wiley & Sons.
Liggio, C.D. (1974).The expectation gap: the accountant's waterloo. Journal of Contemporary Business, Vol. 3(3), 27-44.
Low, A.M., Foo, S.L., & Koh, H.C. (1988). The expectations gap between financial analysts and auditors – some empirical evidence. Singapore Accountant,2, 10-13.
Hudaib, M. & Haniffa, R. (2002), An empirical investigation of audit perceptions gap in Saudi Arabia. Discussion papers in accountancy and finance. School of Business and Economics, University of Exeter, Working paper No. 02/03.
Ojo, M.(2006), Eliminating the Audit Expectations Gap: Myth or Reality? Retrieved April 10, 2014 from Munich Personal RePeEc Archives.http://mpra.ub.uni-muenchen.de/232/mpra paper
Okafor, C., & Otalo, J. I. (2013).Narrowing the expectation gap in auditing: the role of the auditing profession. Research Journal of Finance and Accounting,4(2), 1-33
Okaro S. C., & Okoye E. I. (2011).Forensic accounting and audit expectation gap – the perception of accounting academics. Retrieved March 21, 2014 from http://www.ssrn.com/
Okezie, B. N. (2002). Auditing: concepts, principles and practices. Nigeria, Aba: Concept Publishers
Okezie, B. N. (2004), Auditing and investigations (with emphasis on special classes of auditing).Nigeria, Owerri: Bon Publications.
Porter, B. and Gowthorpe C. (2004), The audit expectation-performance gap in the United Kingdom in 1999 and comparison with the gap in New Zealand in 1989 and in 1999, Scotland: The Institute Of Chartered Accountants Of Scotland. Retrieved May 2, 2014 from http://www.icas-org.uk/site/cms/download/res-porta
Porter, B., Simon, J. & Hatherly, D. (2005).Principles of External Auditing. Australia: John Wiley & Sons.
Queenan, J. (1946). The public accountant of today and tomorrow. The Accounting Review, 21(3), 254-260.
Saad, E. B., Hoos F. and Lesage C. (2013), Why are Auditors Blamed when an Accounting Fraud is Unveiled? Experimental Evidence. Retrieved July 2, 2014 from http//:www.nhh.no/accounting
Salehi, M., Mansoury A. and Azary A. (2009), Audit Independence and Expectation Gap: Empirical Evidences from Iran. International Journal of Economics andFinance.1(1) 65-174
Salehi, M. (2007), An empirical study of corporate audit expectation gap in Iran.Unpublished Doctoral Dissertation, University of Mysore, India.
Schelluch, P. (1996). Long-form audit report messages: further implications for the audit expectation gap. Accounting Research Journal,9(1),48-55.
Singh, A. S., & Masuku, M. B. (2014). Sampling techniques & determination of sample size in applied statistics research: An overview. International Journal of Economics, Commerce and Management United Kingdom, 2(11), 1 -22.
Whittington, O. R., & Pany, K. (2010). Principles of auditing other assurance services,(17th Edition) Canada: McGraw Hills Irwin
Adeyemi. S. B., & Uadiale, O. M. (2011). An empirical investigation of the audit expectation gap in Nigeria. African Journal of Business Management,5(19), 7964-7971.
Akpotu, C., & Omesi, I. (2013). External auditors’ unethical behaviour and corporate business failure in public owned organizations in Nigeria. International Journal of Business and Management Invention, 6, 12-18.
Bailey, K. E, Bylinsky J. H & Shields M. D (1993). Effect of audit report wording changes on the perceived message. Journal of Accounting Research,4, 355-370.
Best, P.J., Buckby, S., & Tan, C. (2001).Evidence of the audit expectation gap in Singapore. Managerial Auditing Journal, 16(3), 134-144.
Brown, R. (1962). Changing audit objectives and techniques. The Accounting Review, 37(4), 696-703.
Cook J. W and Winkle G. M (1976). Auditing – Philosophy and Techniques. USA: Houghton Mifflin Education
Dewing, I.P., Russell, P.O. (2002). UK Fund Managers, Audit Regulation And The New Accountancy Foundation: Towards A Narrowing Of The Audit Expectation Gap. Managerial Auditing Journal, 17(9), 537-545.
Epstein, M.J. and Geiger, M.A. (1994).Investor views of audit assurance: Recent evidence of the expectation gap, Journal of Accountancy, 10, 60-66.
Flint, D. (1988). Philosophy and principles of auditing. Hampshire: MacMillan
Fowzia, R. (2011). An empirical study on audit expectation gap: role of auditing education in Bangladesh. Retrieved from https://mpra.ub.uni-muenchen.de/22708/Munich Personal RePEc Archive
Füredi-Fülöp J. (2015). An empirical study of audit expectation gap in Hungary. Club of Economics in Miskolc, 11(1) 37-46. Retrieved from http://dx.doi.org/10.18096/TMP.2015.01.04
Gill, G., & Cosserat, G. (1996).Modern auditing in Australia (4th ed.). Austrailia: John Wiley & Sons.
Haniffa, R., and Hudaib, M. (2007).Locating audit expectation gap within a cultural context: the case of Saudi Arabia. Journal of International Accounting, Auditing and Taxation.19,179-206.
Humphrey, C., Mozier, P., &Turley, S. (1993), The audit expectation gap in Britain: an empirical investigation. Accounting and Business Research, 23(91A), 395-411.
Humphrey, C.G., Moizer, P., &Turley, W.S. (1992). The audit expectations gap - plus ça change, plus c’est la même chose. Critical Perspectives on Accounting. 3, 137-161.
Ihendinihu J. U & Robert S.N (2014) Role of Audit Education in Minimizing Audit Expectation Gap (AEG) in Nigeria. International Journal of Business and Management,9(2), 203-211.
Institute of Chartered Accountants of England and Wales (ICAEW) (2005) Audit Quality, Agency Theory and the Role of Audit. Audit Quality Forum Retrieved March 16, 2014, from www.icaew.co.uk/auditquality
Institute of Chartered Accountants of Nigeria (ICAN) (2009).Advanced Auditing and Assurance (Study Pack).VI Publishers Lagos Nigeria.
Issahaku S., & Muntari M. (2015).The evaluation of evidence of the audit expectation gap in Ghana. Research Journal of Finance and Accounting,6(24), 20 – 30.
Israel, G. D. (1992). Determining sample size. Agricultural Education and Communication Department, UF/IFAS Extension, University of Florida US. Retrieved January 6, 2014, from http://edis.ifas.ufl.edu/
Kangarlouei S. J, Morteza M., Yaghoub P., Asghar E. & Vali P. (2012).Analysis of Audit Expectation Gap Between Users of Audit Reports and Independent Auditors About the Features of Independent Auditors. School of Doctoral Studies (European Union) Journal10, 83-88.
Lee, J. (1986). Government auditing in China. The Journal of Accountancy, 62,190.
Lee, T. (1994). Corporate audit theory. London: Chapman & Hall.
Lee, T. H & Azham, M.A (2008).The Evolving Role of Auditors: Where Do We Go from Here? Accountants Today, 3, 18-22
Leung, P., Coram, P., Cooper, B., Cosserat. G. & Gill, G. (2004).Modern auditing & assurance service (2nd ed.).Australia: John Wiley & Sons.
Liggio, C.D. (1974).The expectation gap: the accountant's waterloo. Journal of Contemporary Business, Vol. 3(3), 27-44.
Low, A.M., Foo, S.L., & Koh, H.C. (1988). The expectations gap between financial analysts and auditors – some empirical evidence. Singapore Accountant,2, 10-13.
Hudaib, M. & Haniffa, R. (2002), An empirical investigation of audit perceptions gap in Saudi Arabia. Discussion papers in accountancy and finance. School of Business and Economics, University of Exeter, Working paper No. 02/03.
Ojo, M.(2006), Eliminating the Audit Expectations Gap: Myth or Reality? Retrieved April 10, 2014 from Munich Personal RePeEc Archives.http://mpra.ub.uni-muenchen.de/232/mpra paper
Okafor, C., & Otalo, J. I. (2013).Narrowing the expectation gap in auditing: the role of the auditing profession. Research Journal of Finance and Accounting,4(2), 1-33
Okaro S. C., & Okoye E. I. (2011).Forensic accounting and audit expectation gap – the perception of accounting academics. Retrieved March 21, 2014 from http://www.ssrn.com/
Okezie, B. N. (2002). Auditing: concepts, principles and practices. Nigeria, Aba: Concept Publishers
Okezie, B. N. (2004), Auditing and investigations (with emphasis on special classes of auditing).Nigeria, Owerri: Bon Publications.
Porter, B. and Gowthorpe C. (2004), The audit expectation-performance gap in the United Kingdom in 1999 and comparison with the gap in New Zealand in 1989 and in 1999, Scotland: The Institute Of Chartered Accountants Of Scotland. Retrieved May 2, 2014 from http://www.icas-org.uk/site/cms/download/res-porta
Porter, B., Simon, J. & Hatherly, D. (2005).Principles of External Auditing. Australia: John Wiley & Sons.
Queenan, J. (1946). The public accountant of today and tomorrow. The Accounting Review, 21(3), 254-260.
Saad, E. B., Hoos F. and Lesage C. (2013), Why are Auditors Blamed when an Accounting Fraud is Unveiled? Experimental Evidence. Retrieved July 2, 2014 from http//:www.nhh.no/accounting
Salehi, M., Mansoury A. and Azary A. (2009), Audit Independence and Expectation Gap: Empirical Evidences from Iran. International Journal of Economics andFinance.1(1) 65-174
Salehi, M. (2007), An empirical study of corporate audit expectation gap in Iran.Unpublished Doctoral Dissertation, University of Mysore, India.
Schelluch, P. (1996). Long-form audit report messages: further implications for the audit expectation gap. Accounting Research Journal,9(1),48-55.
Singh, A. S., & Masuku, M. B. (2014). Sampling techniques & determination of sample size in applied statistics research: An overview. International Journal of Economics, Commerce and Management United Kingdom, 2(11), 1 -22.
Whittington, O. R., & Pany, K. (2010). Principles of auditing other assurance services,(17th Edition) Canada: McGraw Hills Irwin