The audit expectation gap in Malaysia : an investigation into its causes and remedies

Abstract

Increased litigation and criticism of auditors has left little room for doubt that auditors are facing a liability and credibility crisis. The auditing profession has named this problematic issue the "audit expectation gap". To complement the previous study of Lee et al (2007), this study aims to investigate the causes of the audit expectation gap in Malaysia. 35 semi-structured in-depth interviews were conducted. This study found that the causes of the audit expectation gap in Malaysia are complicated. They arise from a combination of misconceptions or ignorance on the part of users, the complicated nature of the audit function, unreasonable expectations, inappropriate legislation, and under-performance by auditors due to reasons including "low balling" and unreasonable audit fees amongst others. This study draws on these findings and proposes various remedies that may help to bridge the audit expectation gap in Malaysia.