Auditing Essay Example | Topics and Well Written Essays - 2500 words - 1

Auditing - Essay Example ial statement users perceive the auditors responsibilities to be and what the auditors believe their responsibilities entail is referred to as the expectation gap (McEnroe & Martens, 2001). This paper discusses different issues concerning the expectation gap by describing and analyzing the subject. The methodology, process and final output of the auditing process which auditors report remained relatively the same for the 40 year period starting in 1948 until 1988 (Strawser, 1990). During this period the users of the financial information complained a lot about the independent auditor’s report because they were not consistent in their message and their reports were at time interpreted differently by different users of a same report, a situation which should never occur since the accounting profession is based on reliability, consistency, reassurance and equal standards within the work that is performed. One of the first major breakthroughs regarding the expectation gap occurred in 1978. In that year the Cohen Commission identified several possible deficiencies in the auditor’s report which were hindering communications between the auditors and the users of the financial statements (Strawser, 1990). Some the areas which the Cohen suggested that improvement was need ed were: The auditors’ report has always been important since it provides valuable information regarding the validity of public financial information reported by companies. During the 1980’s and early 1990’s the globalization movement and the birth of the information age created a greater urgency to deal with the auditing expectation from private and public institutions. The globalization movement brought enormous opportunities for greater investments due to the free trade possibilities that came with it (Kasapidis, 1999). During this period a lot more individual and institutional investors needed the information to make reliable decisions on domestic and foreign investments. The auditing