Originating from massive publicity on the Danish tax gap for small companies throughout 2018, the purpose of the thesis is to investigate the existence of an expectation gap in regards to audit of tax in the annual report and how to reduce this gap. As the tendency in the publicity has been to equate audit of financial statements with a correct reported income tax return, it is hinting a gap to the existing laws and standards regulating audit of financial statements. The focus of the publicity has been small companies, and as such why this focus is also implemented for the thesis.
By using Brenda Porter and Bent Warming-Rasmussen’s theories on the expectation gap as a basis, the thesis seeks to examine the expectation gap in regards to audit of tax in the annual report from three positions:; the auditors’ position, the costumers’ customers’ position, and the position of public influencers. The method of examination varies between positions to best respond to the respective groups investigated. The auditors’ position has been examined through five qualitative interviews with auditors from diversified audit firms, whereas the costumers’ customers’ position has been examined through a survey of 246 small companies. To examine the position of public influencers a review of public statements has been performed.
Based on the obtained data it has been possible to conclude the existence of an expectation gap in regards to audit of tax in the annual report, which consists of a performance gap between the existing laws and standards regulation regulating the audit of financial statements and the actual audit performed by the auditors of small business’, where the auditors performs six tasks which are not required. Through analysis of the costumers’ customers’ expectations and the audit performed by the auditors of small companies the six tasks were concluded to be reasonable tasks. Further through analysis of the costumers’ customers’ expectations, two expectations was were concluded to be unreasonable and thereby forms the reasonableness gap for customers. Equally, two expectations from the public influencers were concluded to be unreasonable why evidencing that a reasonableness gap also exists for the public influencers.
As an expectation gap exists for audit of tax in the annual report the thesis seeks to propose measures which can reduce this expectation gap. Through the obtained knowledge in the thesis, two suggestions on how to reduce the performance gap are is proposed, and further suggestions are made on how to reduce the reasonableness gap.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||117|