Forventningskløften i Danmark

Mark Larsson

Student thesis: Master thesis

Abstract

The theme of this thesis is the “audit expectation gap” in Denmark. In the last couple of years during the worldwide recession, Denmark has witnessed many corporate failures. Some of those have been regular corporate scandals which have shocked the markets as well as the society in general. The scandals have caused a massive debate and criticism of the auditors of the involved companies, but also the whole audit profession. The criticism launched at the auditors has come from various stakeholders such as politicians, stockholders, journalists and common citizens. The auditors insist that the criticism is unjust and that people often don’t know what an audit implies. This indicates the existence of an audit expectation gap. In this thesis I will investigate if such an audit expectation gap exists, by relaunching a survey performed by Bent Warming, who in 1989 studied the audit expectation gap in Denmark. To support the survey I will perform a case analysis based on some of the mayor corporate scandals from Denmark involving Nordisk Fjer, Roskilde Bank and IT Factory. Furthermore I would also like to understand the audit expectation gap in a social context focusing on why the gap occurs. In extension of this focus I want to analyze and emphasize on how the different stakeholders in the Danish society cope with the gap and on the different investments made trying to prevent it. I found evidence strongly indicating that the audit expectations gap still exist in Denmark. The results of the survey and the case analysis converge and indicate that the gap was manifested by a performance gap and reasonableness gap. The analysis showed that many investments are made to prevent and cope with the audit expectation gap. The association of state authorized auditors, FSR is putting in a mayor effort by communicating with the society through the media and arranging education for the journalist in financial reporting. According to FSR the media play a significant role when stakeholders form their opinion, and by educating them they hope to reduce the gap. Furthermore the law has been regulated as a consequence of the various scandals and there has been an increase in supervision of the auditors, allowing the authorities represented by Erhvervs- og Selskabsstyrelsen to react in an earlier stage, when suspicion of auditors failing to meet what’s demanded by law. Taking the audit expectation gap in conjunction with Callons theory on framing and overflowing, the gap will be the norm and the investments in controlling the gap will be numerous if not endless, and expensive. The theory does not exclude the possibility that the gap can be controlled by appropriate investments but the most realistic scenario is that the gap is the norm. The results of the analysis seem to support this postulate. It’s very difficult but not impossible to control the gap, and the next mayor corporate scandal will indicate whether the investments have been a success or not

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2011
Number of pages90