An Analysis of Audit Expectation Gap and Its Impact on Stakeholder Perception of the Profession

Posted: Aug 05, 2022

• Jasper Lewis
• Cleo Kim
• Finley Patterson

Abstract

The audit expectation gap represents one of the most persistent and challenging phenomena in the accounting profession, describing the disparity between what stakeholders expect from auditors and what auditors actually deliver. Traditional approaches to studying this gap have relied heavily on survey methodologies and qualitative assessments, which while valuable, suffer from limitations in scalability, temporal resolution, and objective measurement. This research introduces a paradigm shift by applying computational linguistics and machine learning techniques to quantitatively analyze the audit expectation gap across multiple dimensions and time periods. Our investigation addresses several fundamental questions that have remained inadequately explored in the existing literature. How does the expectation gap evolve in response to specific regulatory changes and corporate events? What proportion of the gap stems from communication failures versus substantive performance differences? Can we develop predictive models that anticipate fluctuations in stakeholder expectations? These questions require methodological innovation beyond conventional approaches. This paper makes several original contributions to the field. First, we develop a novel computational framework that processes natural language data to extract and quantify expectation gaps. Second, we introduce the concept of expectation elasticity as a measurable characteristic of stakeholder perception. Third, we provide empirical evidence of the dynamic nature of expectation gaps across different stakeholder groups and time periods. Fourth, we demonstrate how