The impact of forensic specialists on the expectation gap: A multiple case study on the Big 4 forensic service departments' influence on auditors in Sweden

Abstract: It has long been a problem for the audit profession that what the public expects from an audit differs from what the auditors themselves would prefer the audit objectives to be. This dilemma is commonly known as the expectation gap. One area where the gap is highly prevalent is when it comes to the auditors' ability and duty to detect fraud. Failing to meet the public's expectations in terms of fraud detection may put the legitimacy of the auditors at risk. There are two ways to address this gap, informing the public about the auditors' responsibilities or adapting to the expectations. The first alternative has been favoured by the audit profession but has not reached the desired results; the expectation gap is still prevalent. It is now suggested that the auditors need to increase their performance to be in line with the public's expectations instead. One way of increasing the performance would be for the auditors to cooperate with forensic specialists. Since the forensic specialists' impact on the expectation gap has to the best of our knowledge, not been studied previously, this paper aims to examine what role forensic services plays in relation to the expectation gap in Sweden. Institutional theory is used to explain the factors both driving and hindering the auditors from addressing the expectation gap with the help of forensic specialists. A multiple case study of the Big 4 auditing firms is conducted, where nine forensic specialists and eight auditors have been interviewed. The identified three main points of contact between the professions show that to the extent the forensic specialists are used, they have an impact on the auditors. The expected effect is an increased performance of the audit and thereby a narrowing of the expectation gap.