ASSESSMENT OF AUDIT EXPECTATION GAP AND AUDIT QUALITY OF LISTED MANUFACTURING FIRM IN NIGERIA

ABSTRACT The purpose of this study was to assess the audit expectation gap and audit quality of listed manufacturing firm in Nigeria. The specific objective for the study is factors contributing to this gap that are of particular concern to the researcher in this study are to examine factors contributing to audit expectation gap, the impact of audit expectation gap, to assess the relationship between stakeholders perception of auditors role and to identify strategies to reduce the audit expectation gap among stakeholders. This study adopts a survey research design. Even though the study covers the manufacturing business landscape of Nigeria, a sample size of one hundred and twenty-five (125) respondents each of which are auditors, accountants in business, financial analyst (bankers and investors/stockbrokers) was selected conveniently as time permitted from the manufacturing firm, companies in Kwara and Osun States. The research instrument used was the questionnaire. The data collected was analyzed using descriptive statistics of simple percentage, frequency count and mean. It was discovered that there is a statistically significant difference between the opinion of auditors and audit beneficiaries in Nigeria with respect to the statutory role of external auditors, reliability on audit reports for investment decision making, nature and meaning of audit report messages scores and independence scores. The study recommend that since there is an audit expectation gap in the area of preparation of the company’s financial statements, responsibility for verifying every accounting transaction undertaken by a company, responsibility for detecting/preventing all fraud in a company, responsibility for an effective system of internal control, responsibility for disclosing whether any theft occurred during the financial year, liability for business failure, being financially liable when the accounts of a company are not handled diligently and responsibility for maintaining public confidence in a company, users should be educated on the responsibilities of auditors and nature of audit services and Perhaps, the accounting profession should consider using the long-form audit report which will explain further the meaning of the report and the extent to which it can be relied upon because some users may not understand the profession’s language with respect to ‘qualified’ and ‘unqualified’.