The Study of Audit Expectation Gap: The Auditor’s Responsibilities in a Financial Statement Audit in Vietnam

Abstract

This research ascertains the structure, composition, and extent of the Audit Expectation Gap (AEG) in Vietnam, thereby demonstrating the existence of the AEG in Vietnam. This study indicates reasonable solutions in narrowing the AEG in auditing financial report in Vietnam. The research design used the research framework of Porter (1993); Porter and Gowthrope (2004); Porter et al. (2012) and Turner et al. (2010). Survey data was collected by sending a random survey questionnaire to four interest groups: (i) auditors (the sample of auditors was a random selection from the list membership of the Vietnam Association of Certified Public Accountants (VACPA), (ii) auditees (joint-stock companies listed on the securities market), (iii) audit beneficiaries - in the financial community (direct beneficiaries of the audit function as users of audited financial statements), and (iv) audit beneficiaries - general public (they are randomly selected in Ho Chi Minh City, Hanoi (Capital of Vietnam) and neighboring provinces where many businesses, investors, and universities are located). The total number of questionnaires sent out was 1400. The number of usable responses was 454 or 32%. The study results provided empirical evidence that the existing AEG in Vietnam was significantly in line with the definition of audit expectation-performance gap (AEG) of Porter (1993) and that there was no research component proposed by Turner et al. (2010). The structure and extent of the AEG in Vietnam: reasonableness gap 31%, deficient standards gap 49%, and deficient performance gap 20%. In this study, the response rates of the survey groups were low. Practical implications included: identifying responsibilities which constitute each component of the AEG in Vietnam and determining the specific causes relevant to each responsibility and solutions to adjust, supplement or amend promptly. This would narrow the AEG in Vietnam. The AEG’s component’s measurements provide the indicator for the relevant agencies to build, implement policies to improve the capacity of independent auditing profession in Vietnam.