An empirical investigation of context‐dependent communications between auditors and bankers

Abstract

Despite attempts to close the expectation gap, researchers in the USA and other countries continue to demonstrate the existence of differences between auditors’ beliefs about their responsibilities and the public’s understanding of the audit function. This study considers how ambiguous language in auditor communications, and the context in which it occurs, contribute to the expectation gap. An experiment examined auditors’ and bankers’ understandings of the phrase “substantial doubt” used in a going concern audit report. It was predicted and found that auditors and bankers had different general understandings of the meaning of “substantial doubt” and their understandings were conditioned on ownership structure, a contextual variable. The results demonstrate the potentially crucial role of context in ambiguous communications with users. Implications of these results are discussed, as are suggested areas for future research.

Citation

Dreike Almer, E. and Brody, R.G. (2002), "An empirical investigation of context‐dependent communications between auditors and bankers", Managerial Auditing Journal, Vol. 17 No. 8, pp. 478-486. https://doi.org/10.1108/02686900210444815