The Scope of the External Audit and Audit Expectations: A Survey Study

Abstract

This study examines the expectations among external and internal auditors and investment analysts for increased responsibilities for external auditors of banks to report to the public on the effectiveness of internal controls and risk management systems. The study survey focused on recent changes in audit requirements for the banks in the Republic of Macedonia, and in that respect incorporates analysis of perceptions and attitudes of external and internal auditors and investment analysts. Interviews were conducted with investment analysts in order to identify relevant expectations from modern assurance services. The results of the survey and interviews analysis suggest that external auditors were divided in their attitudes about acceptance of additional responsibilities for a statutory audit engagement, while the majority of internal auditors surveyed thought that external auditors should provide opinion on the effectiveness of internal control system and risk management system in their report. The results of the study provide good insight for statutory audit policy makers in their understanding of the expectations gap among different stakeholders.

Keywords: audit reports, internal control effectiveness, risk management audit, assurance model