Audit expectation gap in Sri Lanka: The role of policy makers

This study examines expectation differences among auditors and society in terms of auditor responsibility, reliability of audit function and usefulness of audit. Samples include auditors, business managers and investors selected randomly and a convenient sample of management undergraduates. Opinions are solicited using a five-point Likert scale survey questionnaire. The analysis of 252 responses using independent sample t-tests indicate significant perceptual differences in the areas of: responsibility for frauds detection and prevention; preparation and presentation of financial statements; assurance on financial statements; objectivity of auditors; and auditor independence. The reliability is not affected by the size of the auditor organization. Accounting education significantly reduces expectations gap. Auditors place a lesser degree of reliability on audit than the society. The auditors strongly believe that the adherence to code of professional ethics affects reliability. Auditor's role is of value for the society. The paper emphasizes that both public awareness and enhancement of auditor performance should be a focus of policy makers for the improvement of public trust and confidence. It appeals elimination of the misconceptions within the community for informed judgments.