Expectations Gap In Corporate Governance

764 Words 4 Pages
Serving the needs of all the stakeholders with the help of effective internal control systems, policies and procedures lay the foundation of excellent corporate governance. Corporate governance concentrates on management as well as on shareholder’s wellbeing . Internal as well as external corporate governance helps organization in board culture, their share price in market, future need for raising capital and the most important is to gain shareholders trust.

The internal and external check upon the company’s management is maintain by the help of the process of audit and the role of auditors has to be a very concrete one in order to do the process and it goes without any saying that auditors should be independent and impartial. The annual
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Problem arises when there is the lack of understanding of the nature and extent of the auditors’ role. This is the so-called ‘expectations gap’ - the difference between what audits do achieve, and what it is thought they achieve, or should achieve. The expectations gap is damaging not only because it reflects unrealistic expectations of audits but also because it has led to disenchantment with their value.

Responsibilities of an
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The auditor’s opinion helps to determine the true and fair financial position and operating results of an enterprise and that enhances the transparency in the company. This is considered as most recognised as well as expected role of the auditors, and mandated so by the corporate laws of most countries of the world . In India also, the auditor is cast with the responsibility of ensuring this aspect. Provisions relating thereto are contained in Chapter X of the Companies act, 2013 from Section 139 to Section 148 . Aforesaid, clearly underlines the auditor’s statutory role of revealing the true and fair view on financial position of the company to the shareholders and the potential investors. Auditor based on their observation and judgment assesses the true economic value of an

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