10,000 3,000

Topic Description




Audit expectation gap is the gap between the role of an auditor as understood by the auditor and the users of financial statements .It is a gap between what the auditor is doing and what the society expects him to do creating the impression that the statutory objective of audit is not meeting the social needs of the populace.  The functions performed by the accounting profession are vital to the growth and stability of the financial market, whether at the global level or at the local level (Egbiki, 2006: 56 – 57).

An audit has been defined as an examination of the financial statements of an enterprise by an independent expert (the auditor) with a view to attesting that such financial report (in his opinion) show a true and fair view of the state of affairs of that enterprise for the period under review. The contribution of the auditor is to provide credibility to information. This means that the information can be believed and that it can be relied upon by outsiders. The outsiders include shareholders and government regulators. Others are creditors and customers. Usually these third parties use the information to make various economic decisions. An example of this decision is whether to invest in the organization. Economic decisions are made under conditions of uncertainty as there is always a risk that the decision maker will select the wrong alternative and incur a significant loss. The credibility added to the information by the auditors actually reduces the decision makers’ risk Therefore auditors reduce information risk, which is the risk that the financial information used to make a decision is materially misstated. The legal position is that an audit is carried out to enable an auditor form an opinion as to the truth and fairness of financial statements presented to him by his client’s management and to report accordingly. The accuracy of a company’s accounts is the sole responsibility of the directors. However, the accounting profession in Nigeria and other climes has been under intense pressure due to rising public expectations.

These expectations have been fuelled largely as a result of demise of some financial institutions in the late 80’s to early 1990’s and very recently for banks that failed to meet the statutory minimum recapitalization to the tune of N25 billion .Yet other banks failed the CBN ” stress” test. In the light of these developments the heat was turned on accountants as members of the public sought whom to blame. The wide spread news of financial scandal and false reporting rife in the collapsed institutions have cast the organizational controls and auditors in very poor light. It has also tended to undermine the confidence of the public in the profession to detect and prevent corporate abuses.

Audit failures have been blamed, partly, on greed on the part of auditors.  In defense, auditors have often replied that they are not primarily responsible for detecting frauds and errors. However, shareholders, depositors and most of the general public remain unimpressed as they query the value of a watchdog that cannot bark let alone bite. Most people cannot seem to accept the legally defined status. They would wish to see an auditor’s certificate as an assurance that all that needs to be known about the financial transactions of a company have been disclosed to the auditor. In the same vein, an auditor’s signature should be taken to mean that all is well with the health of the institution concerned and that there has been no fraud or other malfeasance.  This, however, is often not the case.

Two components of the audit expectation gap have been identified –communication gap and performance gap. Communication gap has to do with what the auditors think is their role and what the members of the public perceive should be the role of auditors. Performance gap, on the other hand, occurs when public expectations are reasonable but the auditor’s performance does not fulfill them. This means that there is a short fall in the auditor’s performance. (Okafor and Okaro, 2009: 11).

In the past, attempts have been made to bridge the gap by the profession. For example attempts have been made to educate users of the limitations of the modern audit process. As part of the process of   educating the user of audited accounts, the modern audit report usually tries to delineate clearly the respective responsibilities of the directors of a company and that of the auditor in respect of audited financial statements. The profession has also tightened the noose on self regulation bringing to book erring members of the profession. The mandatory continuing professional education whereby members of professional accounting bodies are compulsorily required to attend professional seminars has also ensured that members’ skills are updated and horned up.

However, like a sore thumb, the gap appears to have remained as wide as ever. At the local level, the recent scandal in Cadbury Nigeria Plc whereby profits were overstated by a whopping sum of over N13 billion, and the subsequent indictment of the accounting firm of Akintola Williams Delloite for audit failure, has further aggravated the expectation gap conundrum.

The international community has not been spared either. The collapse of the energy giant Enron in the United States of America in 2002 as a result of what was obviously a case of audit failure and wobbly accounting standards has again ignited a global search for tools to at least narrow the expectation gap.

The literature is awash with fresh suggestions and initiatives aimed at tackling the problem of expectation gap. ICAN MEMBERS are a very important stakeholder group in the search for a solution to the expectation gap problem. Their cooperation or lack of it can have a tremendous effect on the resolution or otherwise of the problem. This work is therefore an attempt to document in Nigeria, the perception of ICAN MEMBERS as to the initiatives for bridging the audit expectation gap problem.


The global search for a solution to the audit expectation gap problem has become strident. The credibility of the accounting profession appears to be at its lowest ebb. In the United States of America, the profession has lost its self regulatory status .In this circumstance, the profession is bestirring itself and the result is a welter of fresh suggestions and initiatives aimed at solving the expectation gap problem. Some of the suggestions appear mundane while some others at best appear controversial. One U.K research study even concluded that expectation gap problem cannot be eliminated. There is the belief that the accountancy profession has resisted change in auditing for so long that it was unlikely to change of its own initiative. In the light of the above, what is the perception of ICAN MEMBERS in Nigeria as to the fresh suggestions and initiatives aimed at addressing the expectation gap problem?


This study has the general objective of ascertaining the perception of ICAN MEMBERS in Nigeria on the vexed issue of bridging the audit expectation gap. The specific objectives of this study are as follows

  1. To ascertain the perception of ICAN MEMBERS in Nigeria as to the suggestions for bridging the expectation gap.
  2. To test the popularity, among ICAN MEMBERS in Nigeria, of the suggestion that convocation of all stakeholders dialogue to negotiate the issues involved in the audit expectation gap problem has become necessary
  3. To elicit the opinion of ICAN MEMBERS in Nigeria as to whether undue delay by the Accounting profession in Nigeria may lead unwittingly to government legislative interference.
  4. To enquire into the attitude of ICAN MEMBERS in Nigeria as regards enlisting the co-operation of rival accounting professionals in Nigeria in the search for solution to the audit expectation gap problem.



This study will be approached in such a way that it will, among others, answer the following questions

  1. What is the perception of ICAN MEMBERS in Nigeria about the efficacy of the suggestions for bridging the audit expectation gap?
  2. What is the opinion of ICAN MEMBERS in Nigeria to the suggestion that the convocation of a stake holder’s dialogue to negotiate the issues involved has become desirous?
  3. Are ICAN MEMBERS in Nigeria worried that any further delay by the accounting profession in Nigeria to find a lasting solution to the expectation gap problem may lead to government legislative interference to resolve it?
  4. Are ICAN MEMBERS willing to enlist the cooperation of rival professional accountancy bodies in Nigeria to confront the monster of audit expectation?



To achieve the above objectives, the following hypotheses are formulated for the research study.

  1. The acceptability of the 29 methods itemized in the questionnaire and aimed at bridging the audit expectation gap, to ICAN MEMBERS in Nigeria is not mixed.
  2. The attitude of ICAN MEMBERS in Nigeria towards the suggestion that the Institute of Chartered Accountants of Nigeria should partner with rival accountancy bodies to monitor performance of professional accounting firms is not negative.
  3. ICAN MEMBERS in Nigeria perception of the idea of   an all inclusive stake holder’s conference to negotiate the issues involved in bridging the audit expectation gap is not positive.
  4. ICAN MEMBERS in Nigeria attitude to the suggestion that further delay in bridging the audit expectation gap might lead to government legislative interference to resolve the issue  is not  positive..



The scope of this study is on the perception of ICAN MEMBERS in Nigeria on the thorny issue of bridging the audit expectation gap given fresh initiatives in this regard. This study will focus on Nigeria. Accordingly, ICAN MEMBERS in Nigeria will be the target of this study and will be sought at MCPE’S, Zonal and annual conferences. Particular care will be taken to ensure that ICAN MEMBERS from the various ethnic and interest groups are covered in the sample. As Abuja has become the melting point of Nigeria’s ethnic groups, the researcher will, among others, sample the opinion of ICAN MEMBERS gathering in Abuja either for MCPE or Annual Conference. The study is being carried out in 2008.

In a research work of this nature difficulties are bound to be encountered. There was paucity of local literature as the researcher was threading on an area that has not been over flogged. Finance constituted another problem limiting the ability of the researcher to travel more extensively in search of relevant data and opinion. Some ICAN MEMBERS filled the questionnaires in a hurry, because of their busy schedules, thus affecting the quality of their answers. Time was of the essence in this research and this also affected the researcher.

On the whole, however, the researcher was still able to use his wealth of experience to navigate successfully   through the difficulties and produce a work that will stand the test of time.



The problem of audit failures globally had tended to exacerbate the problem of audit expectation gap.  As a result the search for a solution has become frenetic. ICAN MEMBERS, especially as auditors, stand at the centre of this effort at a panacea. Chronicling the perception of ICAN MEMBERS in Nigeria as to some of the methods/suggestions on offer for bridging the gap will have the following significance among others, the Institute of Chartered Accountants of Nigeria will benefit immensely from this work as the perception of the rank and file of the Institute about bridging the gap will be documented. The management and members of the Institute can then speak with one voice in any future negotiations aimed at bridging the audit expectation gap. Members of the public will be better informed on this enigmatic subject. Government of Nigeria will be better placed to articulate its own strategy, as the regulatory stakeholder group, in any discourse on this subject matter.  This will apply with equal force to the investing public.   Academics will also have a field day as this work will open a floodgate for further researches on other aspects of this all important subject matter as it affects Nigeria.  Finally, the International community will have the benefit of Nigeria’s experience as the global search for solution to the audit expectation gap cankerworm gathers momentum.


The following operational terms germane to this study are hereby defined:

(1)        The Institute of Chartered Accountants of Nigeria: The first professional accountancy body in Nigeria chartered by an Act of Parliament in 1965 and charged with regulating the practice of