Because there are differences in the subject identified in AEG concepts, previous researchers built many different models of AEG. While some studies established AEG models based on the difference in perceptions of auditors and users, other studies are based only on users’ viewpoint.
3.1. Structure of the AEG based on auditors’ and users’ viewpoint
* The audit expectation gap model of Innes et al. (1997)
The study of Innes et al. (1997) suggested that the AEG needs to be analyzed on both normative and empirical approaches. The normative approach looks at the perceptions of what the auditors should do while the positive approach looks at the perception of what the auditors are doing.
Figure 1: Audit expectation gap model of Innes et al. (1997)
According to the Innes et al. (1997) study, AEG consists of six components:
(1) The gap between the users’ and the auditors’ perception of the work the auditors are doing.
(2) Gap between users' perception of what the auditors should do and what the auditors are doing.
(3) The gap between the users’ and the auditors' perception of what the auditors should do.
(4) Gap between auditors' perception of what they should do and what they are doing.
(5) Gap between the auditors' perception of what they should do and the users' perception of what the auditor are doing.
(6) Gap between users' perception of what the auditors should do and the auditors' perception of what they are doing.
* The audit expectation gap model of Turner et al. (2010)
The AEG model in Turner et al. (2010) study was adapted from Parasuraman et al.
(1985).
In the figure 2, Gap 1 represents the difference between what auditors perceive the customer expects and what the customer actually expects of accounting auditing services.
Gap 2 is the difference between the auditors’ understanding of customers’
expectations and the design of the auditing service. This gap is referred to as the standards gap and results when a service firm does not properly translate customer expectations into service designs and standards.
Gap 3 is the difference between how the auditing service is designed and how the service is actually delivered. This gap is referred to as the delivery gap and occurs when a service firm fails to deliver service according to existing service standards.
NORMATIVE
(Perceptions of what auditors SHOULD be doing)
POSITIVE
(Perceptions of what auditors ARE doing)
USER
AUDITOR
X
X X
X
1 2
4 3
5
6
Gap 4 is the difference between the auditing service delivered to the customer groups and the implicit and explicit service promises made by the auditor to the customer groups. In the marketing literature, this gap is known as the communications gap and is caused when promises from the service provider do not match service performance.
Service customers compare what they receive in a service against what they expected to receive and form their quality judgments of that service based on the gap between expectations and perceptions. The communications gap has been addressed by the accounting profession, which has attempted to provide guidance and expanded explanations of the responsibilities of auditors, with regard to the audit report. Customer Gap denotes the difference between what the service customer expects from the auditing services and what this customer perceives regarding the auditing services.
Figure 2: Audit expectation gap model of Turner et al. (2010)
Provider gap 1 Communication
gap
WOM Requirements of the Individual
Customers
Past Experience - Audit Service
Expected Audit Service Quality
Perceived Audit Service Quality Provider gap
SERVICE CUSTOMERS
AUDITOR
Delivered Audit Service Auditor’s promises to
Individual customers Provider gap 4
Auditing Service Standards
Audit Firm’s perception of Individual Customers’
expectations Provider gap 2
Provider gap 3
* The audit expectation gap model of Ruhnke and Schmidt (2014)
Figure 3: Audit expectation gap model of Ruhnke and Schmidt (2014)
Ruhnke and Schmidt (2014) distinguish between three types of failure to which the audit expectation gap can be attributed: these are indicated in Figure 3. This approach towards analysing the audit expectation gap is useful because any strategies to narrow the gap must necessarily address the relevant cause of failure.
3.2. Structure of the AEG based on only users’ viewpoint
* The audit expectation gap model of MacDonald (1988)
In the diagram, the hatched horizontal line represents the full possible gap between the highest public expectations from audits (point A on the extreme left) to public perception of what is actually obtained from audits (point E on the extreme right). Point C represents what is called for by present auditing and accounting standards by way of auditor performance and quality of financial information reported.
The segment to the left of that point (line segment A to C) represents possible public expectations that go beyond what is called for by existing standards governing auditor performance and the content and quality of financial reporting. This segment is labeled the
“Standards gap”.
The segment to the right of point C (line segment C to E) represent possible public perceptions that auditor performance or audited financial information fall short of what is called for by the profession’s existing standards. This segment is labeled the “Performance gap”.
Public’s expectations (Public’s perception of)
Auditors’ performance AEG
Clear and consistent audit standards
Auditors’ actual performance (Auditor’s perception of) Auditors’ responsibilities
Failure of the public
Failure of the
standard - setter Failure of the auditor
Current audit standards
Figure 4: Audit expectation gap model of MacDonald(1988)
* The audit expectation gap model of Porter (1993)
Figure 5: Audit expectation gap model of Porter (1993)
According to the Porter’s model (1993), the AEG has two major components:
(1) A gap between what society expects auditors to achieve and what they can reasonably be expected to accomplish (designated the “reasonableness gap”).
A B C D E
Public expectations of
audit
Present Standards
Present performance
Public perception of performance
Standard gap
Expectations unreasonable
Performance gap
Performance shortfall perceived but
not real Actual
performance shortfall Expectations
reasonable
Professional improvement needed Better communication needed
Perceived performance of
auditors
Deficient Standards Deficient
performance
Performance gap
AEG
Reasonableness gap
Society’s expectations of
auditors
Auditors’ existing
duties Duties reasonably expected of
auditors
Unreasonable expectations
(2) A gap between what society can reasonably expect auditors to accomplish and what they are perceived to achieve (designated the “performance gap”). This may be subdivided into:
(2.1) A gap between the duties which can reasonably be expected of auditors and auditors’ existing duties as defined by the law and professional promulgations (“Deficient standards”); and
(2.2) A gap between the expected standard of performance of auditors’ existing duties and auditors’ perceived performance as expected and perceived by society (“Deficient performance”).
Because of the different approaches, the components of the AEG in the studies are very diverse. However, in order to reflect the nature of the AEG fully and correctly as well as to measure the AEG objectively, the AEG model of Porter (1993) is considered the most suitable.