Audit Expectation Gap In The Public Sector: A Review of Literature

Abstract

The Audit Expectations Gap (AEG) is a well-known phenomenon in the private sector, and it has developed into an emergent issue that has gotten minimal attention from public sector researchers. Consequently, the AEG in the public sector has been the subject of only a small number of studies, all of which have been carried out pertaining to the financial or performance audit contexts. Subsequently, numerous scholars have defined and assessed the AEG in a variety of ways in a variety of studies using a variety of parameters. The main purpose of this paper is to develop a new synthesis of the extensive literature on the AEG concerning the public sector. Moreover, this study examines the literature on AEG definitions and meanings, diverse dimensions employed to measure AEG, various methodologies used, the reasons for AEG, and mechanisms for narrowing the gap. The relevant articles were mainly selected using related keywords namely “audit expectation gap” and “audit expectation-performance gap” blended with “public sector”, “government sector” or “performance audit” from the Google Scholar search engine and three selected databases from 1974 to 2021, as suggested by Quick (2020). The dominance of the quantitative method within the positivistic approach was found in the examination of the AEG in the Public Sector. Moreover, the Mann-Whitney U test was found to be the predominant analytical method in empirical studies that primarily utilized questionnaire surveys for data collection. The "society" side in the samples has been extraordinarily diverse, whereas the "auditor" end has always been dominated by the Auditor Generals. Further, AEG in the public sector is a multifaceted concept. Multiple causes for the AEG and various approaches to minimizing it in the public sector have been presented. As far as the originality of the study is concerned, this is the first time a literature review on AEG was performed in the public sector context. Further, all of the facets of AEG have been addressed, and research gaps and potential issues for future studies in the public sector are highlighted. Eventually, a novel definition was developed, contributing originality to the existing public sector literature on AEG.