Investigation of audit expectation gap in the era of expanded audit report: Evidence from emerging economy

Abstract

Audit expectation gap is a well-established concept in the auditing literature. The introduction of the expanded audit report is seen as one of the ways that can mitigate the audit expectation gap. Accordingly, the objective of this study is to investigate the presence of the audit expectation gap, particularly after the adoption of the expanded audit report, in Bangladesh. The dataset was obtained from 300 respondents through a questionnaire survey that employed semantic differential instruments. For the analysis, 100 responses from each group, auditors, bankers, and general shareholders, were considered. The analysis involved calculating mean values and conducting Kolmogorov–Smirnov and Mann–Whitney U tests using SPSS software. The outcome of the study, supported by hypothesis testing, presents an audit expectation gap in Bangladesh even after adopting the new format audit report. This study makes an extended contribution to role conflict theory in the context of Bangladesh by providing evidence of an audit expectation gap, which was expected to be reduced with the introduction of the expanded audit report. This study will open a new avenue for examining the audit expectation gap in Bangladesh from different perspectives and will motivate policymakers to identify possible ways to mitigate the gap among stakeholders.