Browsing by Author "Prawanth, S."

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Stakeholders’ Perception on Auditors’ Role and Its Impact on Audit Expectation Gap with Special Reference to Licensed Commercial Banks in Sri Lanka
(Department of Finance, University of Kelaniya., 2022) Prawanth, S.; Perera, K. H.
Purpose: This study was conducted to understand the stakeholder perception on auditors’ role and its impact on audit expectation gap. Design/Methodology/Approach: A sample of 457 shareholders, employees, customers, and auditors from different licensed commercial banks were selected for the study using the convenience sampling method. Information collected through questionnaires was analyzed using descriptive analysis and Mann Whitney U test. Findings: The study revealed an audit expectation gap between auditors and the shareholders; the auditors and customers; and auditors and employees in the areas of audit responsibility, the usefulness of audited financial statements, audit education, and providing non-assurance services. However, this gap was not significant with regard to audit reliability among auditors and employees. Practical Implication: The main reason behind this gap is the lack of proper education and understanding of the audit standards and audit practices. This gap can be reduced by giving adequate knowledge and awareness of audits to the stakeholders and the users of financial statements in general. Limitations: The study considered the stakeholders of licensed commercial banks in Sri Lanka, whereas there are so many other financial institutions registered under the Central bank of Sri Lanka.
Stakeholders’ Perception on Auditors’ Role and Its Impact on Audit Expectation Gap, with Special Consideration to Licensed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Prawanth, S.; Perera, K.H.
External auditor is an individual third party who express an independent opinion on the financial statements in accordance with the Sri Lanka Financial Reporting Standards (SLFRS), Sri Lanka Accounting Standards (LKAS) and Sri Lanka Auditing Standards (SLAuS). An agency relationship exists between the management of the entity and the owners of the organizations, as the management and ownership are two different parties. Therefore, the auditors are responsible for expressing an independent opinion on the quality of financial statements prepared by the Management of the entity. However, most of the stakeholders have misunderstood the responsibilities of management and the auditors and stakeholders (i.e., owners, customers, employees) expect much more from auditors in addition to expression of an opinion on the financial statements, such as investigate and prevent frauds, maintain proper internal control systems, prepare financial statements, etc. This results in an audit expectation gap. Therefore, this study was conducted to understand the stakeholder’s perception on auditor’s role and its impact on audit expectation gap. A sample of 600 shareholders, employees and customers from different licensed commercial banks were selected for the study using convenience sampling method. Information collected through questionnaires were analyzed using a statistical software package, SPSS and used descriptive analysis and sample T test for analysis of data. The study revealed that a gap exists between auditors and the stakeholders in aspects of audit responsibility, reliability and usefulness of audited financial statements. The reason behind this gap is lack of proper education and understanding regarding audit standards and audit practices. This gap can be reduced by giving adequate knowledge and awareness of audit to the stakeholders and the users of financial statements in general.