The Study On Audit Expectation Gap Based On Audit Materiality

In recent years, the accounting firms have entered a "litigation explosion" times, the auditors charged with increasing cases of litigation, and it increased dramatically. With the bankrupt of the massive companies, the accounting firms and auditors in abundance are considered to the court. They sued that the audit reports made by auditors were unreasonable, which made them make the wrong decisions. And they would like to receive the corresponding compensation from auditors. Some relevant scholars found that some of these proceedings were indeed due to the fault of auditors, but there were also some cases in which the auditors have deferred to the extant criterions but still be received. After the studies of scholars they found that the reason of this lies in the audit expectation gap, which refers to the difference between the expectations of the public and the public views on the work of auditors.When auditors use the audit materiality, it may lead to the audit expectation gap. To determine and apply the audit materiality levels throughout the whole process of audit and whether the level is reasonable or not will affect directly to the audit opinion, which will indirectly affect to the users of the statements, because these users'decision-making and a variety of economic activities are rely on the opinion. If auditors estimated higher the materiality level, then the users are likely to make wrong decisions, which will lead to the audit expectation disparity.Study on the audit expectation gap from the perspective of the audit materiality, and on this basis to research the approach of reducing the audit expectation gap from the perspective of the audit materiality are the mainly work of this article. I hope that the research of this issue will benefit to the development of theory and practice of audit.