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The purpose of this study which is to analyze the “auditors gap of independence and reliability of financial statement” with respect to PWC Nigeria is to highlight the factors contributing to audit expectation gap problem in Nigeria. The audit expectation gap is the difference in perception between auditors and users of an audited financial statement concerning the nature of auditing. This study adopts a survey research design. Even though the study covers the business plan scope of Nigeria with respect to price water house coopers in particular. The population size is 15000 persons which are stakeholders of PWC Nigeria out of which a sample size of 200 persons made up of 50 persons, each of auditors, accountants in business, bankers and investors or shareholders were selected continently in Abuja, Lagos, and Enugu. The research instrument used was the questionnaire. The data collected were analyzed using cross-sectional chi-square analysis and analysis of variance (ANOVA). The study found that there exist expectation gap in Nigeria particularly concerning auditors responsibility relating to fraud detection and prevention and soundness of internal control structure of the audited entity. The researcher recommends that the audit profession and regulators should formulate a standard, rules, and regulations that shall adequately guide the auditors to fulfill the reasonable expectations of various user group thereby increasing the rate of reliability of the financial statement..


Title page

Approval page




Table of content



  • Introduction
    • Background
    • Statement of the problem
    • Objectives of the study
    • Research question
    • Statement of hypothesis
    • Significance of the study
    • Scope of the study
    • Limitation of the study
    • Definition of terms



  • Literature review
    • Brief history of PWC Nigeria
    • The auditor

2.3.1       The audit expectation gap

2.3.2       Role of the 21st century auditors to detect and prevent fraud.

2.3.3       Empirical evidence of audit expectation gap

2.3.4       The role of an auditor in ascertaining the going concern status of a company.

2.3.5       Reliability factor

2.3.6 Independency factor

2.3.7       Factors contributing to audit expectation gap.

2.4 approaches to reduce the audit expectation gap



  • Research design and methodology
    • Research design and methodology
    • Introduction
    • Research design
    • Sources of data collection
    • Population and sample size
    • Validity and reliability of measuring instrument
    • Method of data analysis



  • Presentation and analysis of data

4.1  Introductions

4.2  Data presentation and analysis

4.3  Test of hypothesis

4.4  Interpretation of result



  • Summary, conclusion, and recommendation

5.1  Summary of findings

5.2 Conclusion

5.3  Recommendations







PWC Nigeria is a sub-set of price water copper worldwide. PWC is situated virtually everywhere in the world; it is one of the big fire in the audit industry. PWC helps organizations and individuals to create the value they are looking for, they are a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax, and adulatory services. In Africa, PWC is the largest provider of professional service with close to 450 partners and over 8500 people in 33 countries. This means that PWC is able to provide their clients with seamless and consistent services, wherever they are located on the continent. PWC in-depth knowledge and understanding of African operating environment enable them to put themselves in their client shoes in other to offer tailored tax, assurance and advisory solutions per every business challenges. Realizing the appear of the continent African desk provide assistance to organizations looking to expand their presence in African. PWC is one of the leading professional services firms in Nigeria with offices in Lagos, Abuja and Portharcourt, over 900 staff, and 26 resident partners. They’re committed to serving as a force for integrity, good and wise solution to the problems facing business and capital market. They are guided by one promise which is to do what is right, be it with our people client, community or environment. Their client ranges from the biggest, most complex global establishment to smaller, newer business both privately own and those in the public domain. Their audit and assurance, consulting, deal and tax services meet the needs and requirements of each client, irrespective of size or location. Audit is a formal examination, correct and official endorsing account especially those of a business, undertaking annually by an accountant. The accounting profession in Nigeria has been under intense pressure due to rising public expectation which is as a result of service of financial failures that occurred during the recessionary years of the late 80s and early 90s (Ekweme, 2000: 14) these financial failures happened too quickly after an (unqualified) audit report was issued by the external editors Koh and Woo (1998) noted that in recent years some spectacular and publicize corporate collapses and subsequent implication of the reporting auditors have highlighted. The audit expected gap in reality, the unqualified opinion is wrongly seen as a certification that the firm or enterprise is solvent, liquid and has the capacity to adapt to the dynamics of the environment any subsequence failure or business resulting from management with misjudgment fraudulent practice economic instability, inconsistency in micro and macro economic policies etc are viewed as failures of auditors (ardeniji,2004 :510) the role of external audit is crucial in today’s corporate work. This is especially due to the separation of ownership from management as a result of numerous shareholder in companies. The external auditors are usually perceived as independent as a result user reply an audit report because they expect auditors are unbiased (Nagy 2001:4) the auditor’s rolls is carried out to add credibility to the financial information realized after the end of the company financial year. Credibility is however called into question after some spectacular and well-publicized corporation (for example Enu and world cup in USA) collapse shortly after an unqualified audit report has been issued (Leeen, Enloeck and Ralaniapan, 2007:1) these event have thrown the accounting profession into a spotlight. Ekwueme (2000) explained that shareholders and most of the general public fell that as a result of the collapse of banks and firms the auditor’s safe guide are worthless. These perceptions draw a line that needs to define the role of the auditors in protecting the interest of shareholder and ensuring that there is good corporate governance. Owners of business need auditors more than ever, to detect and prevent fraud. Perhaps, this is due to the expanding nature of modern day business. Clients need value added and not an auditory that will vouch and does the normal trade test (Nwokolo 1998:25). Additionally, auditors have been known for high integrity and objectivity as well as their commitment to public interest. In relation to this view Hitler (2000) stated that diverse clients new expect them to provide more services than just performing statutory audit and attesting to the credibility of financial statement. The society wants their franchise to include detection of fraud and exposure of all fraud and exposure of all corrupt practices that are likely to vitiate the fortunes of corporate entities. The difference between the actual nature and objective of an audit and that perceived by the users of audited financial statement has led to the concept of “audit expectation gap” which refers to the difference between what auditors know auditing to be and what the current study aims to complement the study of Lee, clock and Palaniappan (2007), Schelluchi and Crazy (2006), Saha and Baruah (2008) in the following ways. First, the study examines the opinion of auditors, clients, and users of auditors in Nigeria secondly; this study confirms the components of the audit expectation gap in Nigeria. The components are divided into four factors. Two factors namely responsibility and reliability are adopted from the study of best, credibly and ——(2001). Nature and meaning of audit report messages factors is adopted from Schelluch and Cray (2006). This study, however, moves the study by the above researchers by looking into the independence factor. Fraud detection was considered the primary objective of audit process until approximately the middle of 20th century, Chandler, Edwards and Anderson in 1993 concluded that the main objective of auditing has financially statement” this is because the audit profession wanted to avoid legal suits by business and the general public. The conclusion by Chandler, Edwards and Anderson (11993) have also confirmed by Wassink et al, 2009 (cited in Saadi 2012) as they indicated that the audit profession has reduced its role especially in the area of fraud detection and made that the responsibility of management, according to them such shift in audit objectives and responsibilities has credited dissatisfaction of companies. Stakeholders, including shareholders, current and potential investors, creditors et. This resulted in expectations as the stakeholders expected more from the auditing profession. (Saeidi 2012). Although fraud detection has been lacking out of the primary objectives of the auditing profession, the 5th global economic crime survey by priceveater house coppers (2009) reports that fraud remains a pervasive business risk and almost every firm is subjected to occupational fraud. In their daily business, leading to huge losses per business and society. As the stakeholders become dissatisfied with the work of the audit profession, their confidence in audited financial statements will erode with time if nothing is done to remedy the situation. Best, Budoby and Tan (2001) claim that society trust is the heart of a profession. Hence, if such trust disappears is eroded in any way the outcome is likely to involves skepticism and the depletion of value attributed to such profession. Recently, much attention has been paid to control issues and system in order to ———- the audit expectation gap, however the actual level of fraud and financial damage has not decreased (KPMG,2009) a major issue of fraud detection is related to the difficulty  has been empirically established to exist in the above mentioned countries, it appears no studies have been conducted in Ghana in relation to audit expectation gap. Therefore, the objective of this study is to access the existence of the audit expectation gap.



According to PWC, some of the potential and inevitable consequences we perceive may arise from the audit expectation gap problem in Nigeria, considering her fragile democracy and corruption level are as follows: we perceive that if users of audited statement continue to view auditors as puppets in the hands of business organizations, there will be continuous decline in the confidence level of the public. This is lack of confidence would in time destroy the fundamental nature of auditing which is ensuring the integrity and reliability of financial information. The criticism of auditors in Nigeria by users of audited financial statement has stirred many a response both from the profession and statutes. It seems the users have a different idea of what auditing should be. This is what has led to the audit expectation gap. The existence of this gap has been caused by many factors (communication factors and audit failures). In this changing world, business environment requires that auditor’s responsibilities be increased to include fraud detection/ prevention. Also, users want to be able to rely on an audited financial statement for investment decision making. They also desire the absolute independence of the auditor because the absence of it may reduce performance. Users also have a different interpretation of the nature and meaning of audit report. This study will, therefore, attempt to elicit the perceptions of auditors, clients, and users of financial statement on their various understanding of the statutory roles of external auditors or audit report in Nigeria as well as their perceptions of the component of the expectation gap problem.



    The general objective of this study is to elicit the opinion of auditors and audit beneficiaries on the factors contributing to the audit expectation gap problem in Nigeria with respect to PWC Nigeria. From these general objectives, the following specific objectives are drawn:

  1. The opinion of auditors and audit beneficiaries on the statutory roles of external auditors in Nigeria
  2. Whether responsibility and reliability factor contribute to the audit expectation gap problem in Nigeria
  3. If the independence factors contribute to the audit expectation gap problem in Nigeria.



This study deals with the following questions.

  1. Is there any difference among the opinion of auditors, bankers, investors, and accountants in Nigeria on the statutory role of external auditors in Nigeria?
  2. Is there any difference in reliability scores among auditors, bankers, investors, and accountants, in Nigeria?
  3. Is there any difference in independence scores among auditors, bankers, investors, and accountants in Nigeria?



The following null and alternative hypothesis were formulated to guide this study.


HO: there is a difference among the opinion of auditors, bankers, investors and accountants in Nigeria on the statutory roles of external auditors in Nigeria.

Hypothesis1: there is a difference among the opinion of auditors, bankers, investors, and accounts in Nigeria on the statutory roles of external auditors in Nigeria.

Hypothesis 2:     

  1. There is no difference in reliability scores among auditors, bankers, and accountant in Nigeria.

Hi: there is a difference in reliability scores among auditors, bankers, investors, and accountant in Nigeria.

Hypothesis 3:

Ho: there are no independence scores among auditors, investors, and accountants in Nigeria.

Hi: there is a difference in independence scores among auditors, bankers, investors, and accountants in Nigeria.



The motivation for carrying out this study in Nigeria with reference to PWC Nigeria is that auditors are blamed for business failure, perhaps as a result of miss-understanding of the nature of auditing. This study be beneficial to the following

  1. EXTERNAL AUDIT CLIENTS: who form part of the audit beneficiaries will benefit from the result of this study. They will have a better understanding of the statutory objectives of external audit in order to reduce any unreasonable expectations of the external auditors.
  2. AUDITORS: who helps to maintain public confidence in financial statements will understand the expectation of the society in view of protecting their interest and remaining relevant.
  • SCHOLARS IN AUDITING, FORENSIC ACCOUNTING, AND RELATED AREAS: who push the frontiers of knowledge will benefit from this study by developing research interest from the findings of this study. Also, they will have a broader understanding of the audit expectation gap in the Nigerian context.



The scope of the research work has been confined to be the expectation gap challenges in the Nigerian context. The study narrows only to the activities of price water house corps Nigerian and their stakeholders of which we selected the bankers, auditors, investors, and accountants. The study tends to give way to other wider areas which cannot be researched on because of the nature of the case study.



In the cause of this study, the researcher encountered the following problems:

  1. FINANCE: this is a limiting factor as the money used in financing the project was funded privately and as such there was not enough money to embark and x-ray many areas that would have been involved.
  2. TIME: there was limited time for carrying out the research. The case study has been visited on more than one occasion but it was not possible because of the limited time.
  3. Some of the respondents did not return the questionnaire at the stipulated time.
  4. Most organizations in Nigeria are yet to appreciate the importance of research to their operation in particular.


  1. AUDIT: in this study audit refers to the statutory audit carried out by external auditors. It is an independent examination of the financial statement of a company.
  2. EXPECTATIONS: This word refers to the purpose of an audit as perceived by the users of the financial statement.
  3. GAP: This is the inability of the auditors to meet the expectation of the users. In this study, the gap is as a result of a misunderstanding of the auditor’s role and responsibilities, inadequate understanding of the message passed by the audit report and expectations about auditors independence.
  4. RESPONSIBILITY: This covers the duties and statutory responsibilities of external auditor’s as they contribute to the audit expectation gap.
  5. RELIABILITY RECTOR: It elicits the extent to which auditors work or audited statements can be relied on.
  6. INDEPENDENCE FACTORS: This shows the extent to which independent of auditors affect the audit expectation gap.
  7. SCORE: The aggregate response of individual groups of audit beneficiaries.




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