Previous literature show that auditors and the public have different understandings and beliefs about the auditor’s responsibilities.The public’s expectation of statutory audit may exceed the responsibility required...Previous literature show that auditors and the public have different understandings and beliefs about the auditor’s responsibilities.The public’s expectation of statutory audit may exceed the responsibility required by the auditing standard,which leads to the audit expectation gap.Since the 1980s,there are more and more criticisms on statutory auditors especially after the appearance of some auditing fraud such as Enron case in the United States and Maxwell’s case in the United Kingdom.The misunderstanding from the public makes the auditor face more and more challenges.The purpose of this paper is to discuss the components of the gap,and discuss the main reasons based on the existing literature and cases.This paper makes a critical evaluation of the audit expectation gap from three parts:performance gap,standard gap,and reasonableness gap,respectively.展开更多
This paper focuses on the reform of accounting standards in China in 2007 and investigates its impact on equilibrium pricing in the audit market. We find that the concentration of the audit market and the probability ...This paper focuses on the reform of accounting standards in China in 2007 and investigates its impact on equilibrium pricing in the audit market. We find that the concentration of the audit market and the probability of issuing modified audit opinions do not significantly change, but that audit fees increase significantly after the adoption of the new accounting standards in China. Deeper analysis suggests that(1) the implementation of the new IFRS-based Chinese Accounting Standards(CASs) has increased the market risk faced by listed firms and thus auditors' expected audit risk, causing an increase in audit fees,and(2) the degree of the increase in audit fees is positively related to the adjusted difference between net income according to the old CAS before2007 and the new CAS after 2007. We thus conclude that the reform has had a significant impact on audit pricing in China.展开更多
文摘Previous literature show that auditors and the public have different understandings and beliefs about the auditor’s responsibilities.The public’s expectation of statutory audit may exceed the responsibility required by the auditing standard,which leads to the audit expectation gap.Since the 1980s,there are more and more criticisms on statutory auditors especially after the appearance of some auditing fraud such as Enron case in the United States and Maxwell’s case in the United Kingdom.The misunderstanding from the public makes the auditor face more and more challenges.The purpose of this paper is to discuss the components of the gap,and discuss the main reasons based on the existing literature and cases.This paper makes a critical evaluation of the audit expectation gap from three parts:performance gap,standard gap,and reasonableness gap,respectively.
文摘This paper focuses on the reform of accounting standards in China in 2007 and investigates its impact on equilibrium pricing in the audit market. We find that the concentration of the audit market and the probability of issuing modified audit opinions do not significantly change, but that audit fees increase significantly after the adoption of the new accounting standards in China. Deeper analysis suggests that(1) the implementation of the new IFRS-based Chinese Accounting Standards(CASs) has increased the market risk faced by listed firms and thus auditors' expected audit risk, causing an increase in audit fees,and(2) the degree of the increase in audit fees is positively related to the adjusted difference between net income according to the old CAS before2007 and the new CAS after 2007. We thus conclude that the reform has had a significant impact on audit pricing in China.
