Effect of Audit Expectation Gap in Nigerian Capital Market

Paul N. Onulaka


Audit expectation gap is a phenomenon that presently attracts the attention of researchers all over the world. The basic problem is in the area of how the public perceives the role of the auditor, which in most cases centers on the prevention of fraud and irregularities. On the other hand the auditor and the auditing profession always exonerate themselves from the fact and perception of the public towards their work. However, the continued litigation against the auditor and the auditing profession has called on a rethink on the relationship of the auditor and the audit work he performs This paper is structured to briefly establish what auditing and its expectations gap is and the relationship audited financial statement has on capital market and to investigate if the identified gaps have any significant effect in the volume of transactions in the Nigerian capital market.It sought to establish the perception of the capital market operators on its existence. Respondents view was also sought on how the gap could be narrowed. Chi-square (χ2) was used to analyze the data obtained from the study. The data were obtained through questionnaire. Two hundred and ninety (290) copies of the instrument were found useful out of 350 copies distributed using purposive sampling technique. In this study, a cross-sectional survey was conducted in Lagos and Abuja stock Exchange to capture the perceptions of key users of financial statements in Nigerian capital market. The tests of hypothesis were done using Microsoft Excel 2010 version. Tests were carried out at a significant level of 5% and twelve degree of freedom. The findings of the study indicated that there is a wide expectation gap in the areas of auditors’ responsibility for fraud prevention and detection. Audit expectation gap has negative impact on the volume of transactions in Nigerian stock exchange.

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DOI: https://doi.org/10.5296/ijafr.v4i2.6485


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Copyright (c) 2014 Paul N. Onulaka

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International Journal of Accounting and Financial Reporting  ISSN 2162-3082

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