Abbas Lari Dashtbayaz, Mahdi Salehi, Mahmoud Mousavi Shiri
This paper proposes a model for the unreasonableness audit expectation gap and assesses the relationship between fraud in financial statements, audit precision, and total and unreasonableness audit expectation gap. This paper utilizes a descriptive-correlation procedure based on published information from listed firms on the Tehran Stock Exchange during 2013-2018 using a sample of 128 firms (699 observations). The method used for hypothesis testing is panel data linear regression. The results show a negative and significant relationship between auditors' accuracy and the total and unreasonableness audit expectation gap. A positive and significant association between fraudulent financial statements and the total and unreasonableness audit expectation gap is found. Some additional tests are also used to ensure the results of the main methods and confirmatory tests are totally in line with that of the main method.
The present study presents a new model for measuring the unreasonableness audit expectation gap, the most difficult of the kind among users and auditors. This factor is assessed in the emergent financial markets, like Iran, with an extremely competitive audit market to specify the relationship between fraud in financial statements and audit precision and the total and unreasonableness audit expectation gap. It can provide useful information in this field.