S2 contemporary issues

Question 1

what is the expectations gap and types of gap

Answer 1

difference between what the general public expects from auditors and what the profession actually provides
Performance gap
Deficient performance gap
Failure to report going concern or detect material error
Deficient standards gap
Fraud detection, report problems to contractual client, scope of audit
Reasonableness gap
Predict going concern, detect fraud, examine every transaction
gap arises from misunderstanding about the profession

Question 2

explain the gap

Answer 2

auditors role v company directors role
Misunderstanding or lack of clarity on audit purpose
Scope - extent of audit coverage
Scope - Fraud
Time - backward looking audits and companies future viability
Form and content of auditors output
Knowledge gap, performance gap, evolution gap

Question 2

how can technology enhance AQ

Answer 2

capture and analyse whole populations
Modelling and predictive analysis
Facilitates risk assessment
Automation of routine tasks
Deepens auditor understanding of client system
Enables testing on large data sets
Identifies outliers
Need skilled and trained audit team still