Self-Regulatory Policy of Accounting and Auditing Profession and Its Effect on Audit Expectation Gap in Nigeria

Abstract

From the very beginning, auditing is pretty much a self-regulated profession and has some ethical rules of thumb to follow in practice. But the plethora of corporate failures and scandals in recent past where auditors’ instrumental role is evident in many instances raise question about the validity and suitability of “self-regulation” in auditing, especially in Nigeria and some other parts of the world where auditors need to perform auditing in ever complex risk management process. However, to restore the public confidences within and outside the auditing profession and to raise the overall audit quality, many countries are establishing some super regulatory bodies to set accounting and auditing standards and regulate the activities of auditors with a view to reducing audit expectation gap. The reason for this paradigm shift is because events over the last decades has shown that an inverse relationship appears to be existing between efforts being made to reduce audit expectations gap by accounting and auditing profession and the actual number of audit failures.  This study adopted a cross sectional survey design. This was designed to investigate whether there is a relationship between the self-regulation of accounting and auditing profession in Nigeria and audit expectation gap.  Pearson Product Moment Correlation Coefficient was used for data analysis.  The finding shows a strong relationship between self-regulation and audit expectation gap and the deficient standard gap is not only associated with selfregulation but other legal pronouncements which the respondents considered obsolete and need to be revamped.