AUDIT EXPECTATION GAP AND CREDIBILITY OF CORPORATE FINANCIAL REPORTS IN NIGERIA

ABSTRACT

This study examined audit expectation gap and corporate financial reports in Nigeria. The objectives were to ascertain whether deficient standard gap have effect on the credibility of corporate financial reporting; establish if deficient performance gap affect credibility of corporate financial reporting, and ascertain whether reasonableness/unreasonableness expectations gap have effect on credibility of corporate financial reporting. Primary data were sourced through questionnaire administered to Accountants, Auditors, Investors and Bankers from South West, South South and South East Zones of Nigeria. A sample of 325 respondents were used for the study. The ordered logit and probit regression technique were used to examine the relationship between the variables using IBM SPSS Statistics 24 and E-view 10 software. The study revealed that there was significant relationship between credibility of corporate financial reporting and deficient performance gap. However, the study showed no significant relationship between deficient standard gap, reasonableness/unreasonableness expectations gap and the credibility of corporate financial reporting. It concludes that poor performance of auditors negatively affects the credibility of corporate financial reporting; therefore it was recommended that professional accounting bodies and regulatory authorities should continue to monitor the performance of Auditors to ensure that they meet required standards.