THE EXPECTATION GAP IN THE AUDIT ENVIRONMENT AND ITS REFLECTION IN THE AUDITOR’S REPORT: A CASE STUDY IN THE SOUTH REFINERIES COMPANY – A PUBLIC COMPANY
Received: 30.04.2021; Revised: 29.06.2021, Accepted: 28.07.2021, Published Online: 10.08.2021
Mamon Ali Talib
MSc. Student, Faculty of Graduate Studies, Southern technical University, Basra, Iraq.
Alaa Fareed Abdulahad
Professor of accounting, Management Technical College, Southern Technical University, Basra, Iraq, firstname.lastname@example.org
Jalil Ibrahim Salih
Professor of accounting, Management Technical College, Southern Technical University,
Basra, Iraq. email@example.com
The research dealt with the problem of the emergence of the expectation gap in the audit environment and its negative effects on both the audit profession and the users of financial statements. And the role and impact of implementing compliance tests in reducing that gap and limiting its negative effects to get the best of what is reflected in the financial statements in their representation of the financial position of the study sample company and its business results. Consequently, it is relied upon by internal and external parties to make rational economic decisions. The research concluded several results, the most important of which was that the implementation of compliance tests has a positive role in reducing the expectation gap through the auditor’s understanding of each of the company’s control environments and the progress of operations in the accounting system. As well as assisting the auditor in determining the level of implementation of the company’s sample of the elements included in the internal control system and thus the accuracy of the balances shown in the financial statements. This is one of the objectives of designing and implementing an internal control system. The research recommends that professional organizations adopt reasonable expectations and requirements for users of financial statements and meet them by issuing them in the form of professional standards and rules.
Keywords: expectation gap, compliance tests, internal control system.