Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/27323
Title: The problematic relationship between audit reporting and audit expectations : some evidence from Hong Kong
Authors: Leung, P 
Chau, G
Issue Date: 2001
Publisher: Elsevier
Source: Advances in international accounting, 2001, v. 14, p. 181-200 How to cite?
Journal: Advances in international accounting 
Abstract: The audit expectation gap has been documented virtually in most Western parts of the world and has been a concern of professional accountants and professional accounting bodies for decades. It leads to undesirable consequences such as increased litigation against auditors and discrediting the accounting profession. Professional accounting bodies attempt to narrow the gap by introducing new auditing standards and revising format, content, and wording of the auditors’ report. This paper reports the results of a mail questionnaire, which is a partial replication and extension of Hatherly et al. (1991) to bankers and auditors in assessing the effectiveness of the recently adopted revised auditors’ report in Hong Kong in reducing the audit expectation gap. Institutional context and culture in Hong Kong are suggested to provide some plausible explanations of the differences in findings. The results are likely to be relevant to other countries given the similarity of the format and wording of the revised auditors’ report used in this study and the global harmonization of auditing standards. The revised auditors’ report has a “double edged” effect. On the one hand, the results indicate that it is effective in reducing perceptual differences on a few dimensions, especially those directly addressed in the revised auditors’ report. On the other hand, it also creates greater disenchantment and devaluing of the audit function, which would lead to a larger expectation gap in the long run. Consistent with previous studies, this study also found that bankers still have high expectations on the role of auditors in fraud detection. Implications to the auditing profession are discussed.
URI: http://hdl.handle.net/10397/27323
ISSN: 0897-3660
DOI: 10.1016/S0897-3660(01)14010-9
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