The expectations gap represents a misunderstanding whereby shareholders mistakenly believe that they are entitled to recover losses on investments for which the auditor provided an unqualified opinion on the financial statements.

Question

Quizplus · Accepted Answer

The expectations gap refers to the difference between what the public and financial statement users believe auditors are responsible for and what auditors actually believe their responsibilities entail, including the misconception that an unqualified audit opinion guarantees the financial health of a company and protects against investment losses.

The Expectations Gap Represents a Misunderstanding Whereby Shareholders Mistakenly Believe