Audit expectation gap
Definition
The difference between what auditing standards require auditors to do and what the public, investors, or regulators believe auditors are responsible for. In the fraud context, the gap is the common misbelief that a clean audit opinion certifies the absence of fraud.
Related terms
- Fraudulent financial reporting
- One of the two ISA 240 fraud categories. It involves intentional misstatement or omission in financial statements to deceive users: overstating revenues,...
- ISA 240
- International Standard on Auditing 240, 'The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements,' issued by the IAASB. Sets...
- Material misstatement due to fraud
- A misstatement in the financial statements caused by intentional act (fraud rather than error) that is large enough, individually or collectively, to...
- Misappropriation of assets
- The second ISA 240 fraud category. It involves theft or misuse of an entity's assets by employees or management: cash skimming, expense...
- Professional skepticism
- An attitude requiring the auditor to question information, remain alert to conditions that may indicate misstatement, and critically assess audit evidence rather...
Explained in
- Audit Standards and the Auditor's Responsibility for Fraud DetectionThe difference between what auditing standards require auditors to do and what the public, investors, or regulators believe auditors are responsible for. In th...