Expectation gap is the gap between what public believe that auditors do and what actually auditors do or ought to do. Expectation gap occurs when the audits fail to meet the expectations of users of audited financial statements. The public is generally not aware of the auditor’s actual standards of performance and the scope of his work and therefore there is always a difference between the auditor’s performance and the public’s expectations of the auditor’s performance.
Expectation gap can arise because of the following categories:
- A standard gap – where the public believe auditing standards to be different from what the auditor actually do.
- Performance gap – where auditors operates below required standards
- A liability gap – where the public do not understand whom the auditor owes responsibility or accountability.