Forståelses- og forventningskløften i 2011: En analyse af forståelsen og forventningerne mellem revisor og regnskabsbruger i en tid med fokus på fortsat drift

Hanne B. Thomsen & Thomas Hejbøll

Student thesis: Master thesis

Abstract

This thesis has been prepared at the Copenhagen Business School and constitutes the final part of a Master-of-Science degree in Business Economics and Auditing. The thesis addresses a target group consisting of persons with accounting knowledge such as executives, auditors and graduate students. The issue dealt with in the thesis is based on the theory about the existence of the expectations gap and the comprehensibility gap between the auditor and the financial statement user, and parallels are drawn to the way the financial statement user perceives the going concern assumption and how the auditor communicates his/her conclusions in this regard in the audit report to the financial statement user. The issue is defined by way of a general presentation motivating and specifying our choice of issue, resulting in the following title question: ‘Based on the theory, we will examine whether the comprehensibility gap and the expectations gap between the auditor and the financial statement user as well as the factors underlying such a gap, if any’ In order to be able to answer the title question, we have listed sub-questions ending with the four hypotheses the purpose of which is to form a basis upon which to analyse the theory, combined with empirical data. The theory addressed in this thesis is based on the Danish Financial Statements Act in order to explain the fundamental principles underlying financial statements. Based on the Danish Financial Statements Act and Act no. 468 of 17 June 2008 on Approved Auditors and Audit Firms, we subsequently define the duties of the management and the auditor in relation to the preparation and audit of the annual report. As the hypotheses advanced here further aim at elucidating the way the financial statement user perceives the going concern assumption, we also describe the theory underlying the way the concept is treated for accounting and audit purposes. As one of the most significant aspects of the theory is the comprehensibility gap and the expectations gap, we specify the theory which, in combination with other theories, forms the basis for the empirical approach taken in the thesis. As the rest of the thesis addresses the auditor’s report to the users of financial statements, we will examine the Danish Executive Order on Statements Made by State-Authorised and Registered Public Accountants and relevant Danish Standards on Auditing. The purpose is to clarify the auditor’s possibilities of expressing his/her opinion on the audited financial statements. Once the auditor has expressed his/her audit opinion it is important also to be able to define which sanctions may be imposed upon the auditor if s/he has failed to observe the rules and regulations in force from time to time. For purposes of answering the four hypotheses of the thesis, we have drawn up a questionnaire, which has been sent to selected groups of respondents. The purpose is to identify any indications of inconsistency between theory and empiricism and to identify and draw conclusions on the possible existence of the expectations gap and the comprehensibility gap. We have sent the questionnaire to auditors, executives, shareholders and journalists, and we have compared the answers received with the theory previously examined. The respondents’ answers indicate at some level of agreement at respondent type level. The opposite has also been the case where the respondents merely have given indicative answers, because the respondents’ attitudes to the answer in question differ. Based on the comparison between the theory examined with the empirical data derived from the answers to the questionnaire, our answers to the title questions are as follows: Based on the theory about the comprehensibility gap and the expectations gap, we noted on several occasions that even though their occupation and former experience were similar, the respondents did not provide identical answers. The most significant factor underlying the comprehensibility gap between the auditor and the financial statement user is the respondents’ different knowledge. It is evident that respondents who do not have any audit experience do not have the same knowledge about rules and practice, and that may result in a comprehensibility gap. Also, we identified an expectations gap, because, when expressing his/her audit opinion, the auditor expects that the financial statement user possesses the knowledge required to interpret the audit opinion correctly, which is not always the case. Finally, we assume that both the comprehensibility gap and the expectations gap exist, although they have been reduced significantly compared to earlier. It is not possible to draw any conclusions as to whether both gaps will be eliminated in the longer term.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2011
Number of pages178