FACTORS INFLUENCING THE AUDIT EXPECTATION GAP IN PUBLIC SECTOR IN TANZANIA

Abstract

This quantitative study comprehensively assessed the factors influencing the audit expectation gap within Tanzania's public sector, focusing on the Arusha City Council. The specific objectives were to assess the influence of communication practices, regulatory frameworks related to financial reporting, auditing, and governance on the audit expectation gap. The study was guided by Stakeholder Theory and Agency Theory. It was conducted using a descriptive statistical research design. Quantitative methods, including descriptive statistics and Pearson correlation analysis, were employed to analyze data gathered through surveys. The study's location at the Arusha City Council provided crucial access to data and stakeholders, ensuring the relevance of the findings to policy decisions. A total of 186 questionnaires were completed from an initial sample size of 243.In relation to the first objective, the findings revealed that communication practices had a positive correlation with the audit expectation gap, indicated by r = 0.662 and p = 0.000. Results regarding the second objective demonstrated a strong positive correlation between regulatory frameworks and the audit expectation gap, indicated by r = 0.770 and p = 0.000. Additionally, results regarding the third objective showed a strong positive correlation between regulatory frameworks and the audit expectation gap, indicated by r = 0.825 and p = 0.000.The study concluded that effective communication practices significantly reduced the audit expectation gap by clarifying audit objectives, scope, and outcomes, thereby enhancing stakeholder satisfaction and trust. Robust regulatory frameworks were found to play a pivotal role in aligning stakeholder perceptions with audit outcomes, emphasizing transparency and compliance with international standards. Furthermore, capacity-building initiatives were identified as critical in enhancing audit quality and stakeholder satisfaction by improving auditors' technical expertise and adaptability. The study recommended the importance of investing in training and tools to improve communication skills among auditors, strengthening regulatory frameworks, and prioritizing continuous professional development to bridge the audit expectation gap in Tanzania's public sector. Future studies should focus on identifying the determinants of audit quality.