Auditing, Regulation and the Persistence of the Expectations Gap

Authored by: Christopher Humphrey , Anna Samsonova , Javed Siddiqui

The Routledge Companion to Accounting, Reporting and Regulation

Print publication date:  September  2013
Online publication date:  October  2013

Print ISBN: 9780415625739
eBook ISBN: 9780203103203
Adobe ISBN: 9781136243509


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The statutory financial audit for a limited company is essentially a process through which the credibility of the financial statements produced by the company’s management are independently assessed by an external auditor, who then reports his/her opinion to the company’s members (i.e. its shareholders). However, as Humphrey (1997) points out, the auditing assessment or examination should not regarded as an exact science, ensuring 100 per cent accuracy of the information contained in the financial statements. Rather, the assumed purpose of an audit is to ensure that the financial statements are reasonably free from material misstatements and errors, with auditors having a formal responsibility to express their opinion regarding the ‘truth and fairness’ of the financial statements prepared by the entity. 1

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