It is vital that the auditor's opinion on the financial statements has credibility. If the opinion has no credibility, then it is of little use, as a major reason why an entity engages, or is required to engage, a financial statement auditor is to add credibility to the financial statements prepared by management.
The credibility of auditors may be perceived as being at risk as a result of either (i) lack of independence or (ii) what is referred to as to the expectation gap. The latter expression refers to the gap between auditors' actual standard of performance and the various public expectations of auditors' performance. The gap may be minimized by the imposition upon auditors of professional, statutory and common law duties, imposed, respectively, by professional organizations, governments and courts of law.
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