Audit Expectation Gap and Approaches to Reducing It

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE
FINAL ASSESSMENT
TRIMESTER TR1, 2021
Assessment Weight: 50 total marks
Instructions:
 All questionsmust be answered by using the answer boxes provided in this
paper.
 Completed answers must be submitted to Blackboard by the published due
date and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HI6026 Final Assessment T1 2021

Adapted Harvard Referencing
Holmes has now implemented a revised Harvard approach to referencing:
1. Reference sources in assignments are limited to sources which provide full text
access to the source’s content for lecturers and markers.
2. The Reference list should be located on a separate page at the end of the essay and
titled: References.
3. It should include the details of all the in-text citations, arranged alphabetically A-Z
by author surname. In addition, it MUSTinclude a hyperlink to the full text of the
cited reference source.
For example;
P Hawking, B McCarthy, A Stein (2004), Second Wave ERP Education, Journal of
Information Systems Education, Fall,
http://jise.org/Volume15/n3/JISEv15n3p327.pdf
4. All assignments will require additional in-text reference details which will consist of
the surname of the author/authors or name of the authoring body, year of
publication, page number of content, paragraph where the content can be found.
For example;
“The company decided to implement an enterprise wide data warehouse business
intelligence strategies (Hawking et al, 2004, p3(4)).”
Non - Adherence to Referencing Guidelines
Where students do not follow the above guidelines:
1. Students who submit assignments which do not comply with the guidelines may be
required to resubmit their assignments or incur penalties for inadequate referencing.
2. Late penalties will apply per day after a student or group has been notified of a
resubmission requirements.
 Students whose citations are identified as fictitious will be reported for academic
misconduct.
HI6026 Final Assessment T1 2021

Question 1 (7 marks)
Explain the definition of the audit expectation gap? Then, discuss some approaches to
reducing the expectation gap.
ANSWER: ** Answer box will enlarge as you type
The particular concept of audit expectation gap is define the difference between what auditors
consider themselves responsible for and public & financial information users such as
stakeholders’ perception regarding the mentioned authority’s duty. In addition to this, it can
arises concerns about actual performance of auditors that hamper auditing process. There is
misperceptions in public related to auditors roles that creates hurdles in smooth functioning of
auditing procedure of company. The factors that are misperceived by mentioned parties in
respect to auditors includes liability, ethical & legal framework audit reports (Bhuiyan and
D’Costa, 2020). With respect to this, it influences auditor's independence, regulations appoint,
etc. Various approaches assist in eliminating audit Expectations Gap (AEG) in order to avail
effectual pattern for carrying forward business practices. There are two types of gap such as
feasibility and performance that need to emphasize in turn removing difference can become
possible.
The strategies that can be taken into process includes increasing awareness of public for
auditors roles & responsibilities. It will helps in clearing false opinion that public has related to
auditors so that appropriate legal framework can established to get efficient working methods.
Inclining involvement of external auditors for checking of internal prepared reports can give
assistance in accomplish objective of narrowing expectation gap. Educating auditors for
understanding established standards through providing training & development in turn
professionalism approach can be attained. Appropriate knowledge related to interpretation
financial statement via its user parties can play role in declining misconception of auditor’s
responsibilities. Increasing communication between mentioned profession and society interested
in auditing process can contribute largely in attaining goal of lessening s in appropriate
expectations. Several effective measures to increase quality performance of auditor can enable
to bridge gap and as well provide assistance in implementing correct expectation through making
all involved parties alter in respected to stated subject matter.
Question 2 (7 marks)
The audit partner has just advised you that he has been approached to accept the
appointment of auditor to Bungie Limited. Bungie Limited is a manufacturer of gaming
machines and has been named in a recent anti-corruption enquiry as having offered
incentives to state government members to support a proposed bill that would allow an
HI6026 Final Assessment T1 2021

increased number of gaming machines in licensed premises. No charges have yet been
laid against Bungie Limited or any of its employees. The audit partner explains to you
that Bungie Limited’s auditors were re-appointed for the current financial year at the
Annual General Meeting held two months ago. However, Bungie Limited’s managing
director is unhappy with the existing auditing firm as the audit partner assigned to
Bungie Limited has been changed.
Required:
The audit partner is unsure whether he should accept the appointment and has asked
you to outline any ethical, legal, and other factors to consider in his decision about
whether to accept the appointment for the current year and indicate the steps that need
to be taken prior to the appointment.
ANSWER:
The auditor partner should accept the appointment of Bungie Limited as from the case it can be
understood that working in such organization would be beneficial from all perspective. There are
various ethical principles that helps an auditor to work efficiently and fairly. The set of principles
aids in recognising difference between correct & in appropriate activities. These comprises
integrity, confidentiality, competency and objectivity while conducting practices of auditing.
Being and independent working professional it requires to contribute to ethical & legitimate
objectives of organization (Australia, 2019). In accordance with corporation act organization
appoint an auditor so having proper outline of legal framework for getting deep insights of
related aspects in turn significant factors influencing decisions can be taken into practice. In
addition to this, facts relevant to the integrity of management, auditing procedure,
communication with governance, connection with organization team for getting information
regarding deficiencies & weakness of internal control. Financial reporting framework,
compliance with laws & legislations, etc.
Factors indicates the independence, appointment and expectation related to roles &
responsibilities must be clarify before accepting the offer. Integration of accounting standards
with substantive law serve vital function through utilizing principles mandated by legislation.
Bungie Limited’s offer for auditing position acceptance should complete with emphasising prior
on following steps. Pre engagement procedure that assist in getting data regarding an
independence and communication with previous auditors. Letter of compliance with relevant
professional standards, disclosing relationship between auditor & entity affecting roles,
potential risk , identifying major changes in respect to scope, materiality, timing, approaches,
etc.
It becomes essential to give focus on director’s and other parties of organization in order to
HI6026 Final Assessment T1 2021