In the report ‘Audit Quality in Australia’, released by the Treasury in March 2010, the following was noted:

Treasury proposes to encourage focused discussion with key stakeholders including ASIC, the FRC, the Auditing and Assurance Standards Board (AUASB), the major audit firms and the professional accounting bodies on strategies to minimise identified audit expectation gaps. Treasury is of the view that any proposals to change the current standard audit report would need to be subjected to rigorous cost/benefit analysis to ensure that the risks associated with any changes do not negate the potential benefits. In that context, Treasury is concerned that because of the wide disparity between the sophistication of retail and more sophisticated investors in terms of their understanding of financial statements and audit reports, any changes to the standard audit report may have the perverse effect of introducing confusion among some users, leading to a widening of the expectations gap.

Required

a. Find recent research on the ‘audit expectation gap’. Is changing the audit report the only problem associated with this ‘gap’?

b. Does research suggest that the audit report should stay the same because changing it would lead to confusion among users?