The audit expectation gap in the Lebanese commercial banking sector

Abstract

Purpose - The purpose of this thesis is to attempt to investigate the potential existence of an Audit Expectation Gap (AEG) in the Lebanese Commercial Banking Sector and assess the understanding of bank employees of the standards of internal audit as promulgated by both the Institute of Internal Audit and the Lebanese Central Bank. Design/methodology/approach - Deductive in nature, this thesis uses a questionnaire survey to examine the existence of a significant AEG in different areas of audit. Findings - The thesis finds evidence that an AEG exists in the areas of fraud detection and risk. However, the study suggests that the gaps in those areas seem to be hard to bridge irrespective of the differences in the educational and professional status. Research limitations/implications - This research can be extended through assessing the reasons behind the current status of education not being able to bridge the AEG. Practical implications - At a practical level, this thesis highlights the existence of a significant gap in the understanding of bank employees of the role of internal auditors. This knowledge can be used by proper authorities to introduce actions that might help in having better informed employees in the commercial banking sector with regards to the role of the internal audit function. Originality/value - The paper contributes to the existing literature by presenting evidence of the existence of an AEG in the Lebanese commercial banking sector. This paper is also of originality since it studies the existence of an AEG with respect to the role of the Internal Audit function within a bank.