Bridging the Expectations GAAP in Financial Reporting

Authors

Neal F. Newman, Texas A&M University School of LawFollow

Document Type

Article

Publication Date

11-2025

Journal Title

Wake Forest Journal of Business & Intellectual Property Law

ISSN

1936-8666

Abstract

The true nature of auditing publicly traded companies’ financial statements has been somewhat of an enigma to the general public. Due to this mystery, an “expectations gap” has formed between the public expectations of auditors’ roles and what the auditor actually does in their analysis of financial statements. Auditors are an extremely important piece of the financial reporting puzzle because they determine whether or not a company’s financial statements are a fair and accurate reflection of the company’s financial position, a determination that can be a major influence on how the financial strength of a company is perceived. Newman’s Article explains how, despite public perception, auditors only test small amounts of the financial data of a company. Due to the principle-based design of the auditing standards, auditors are given flexibility in their analysis that leads to reviewing small amounts of information. Thus, the standards provide an opportunity for both complicit audit and financial fraud to occur simultaneously. By detailing what auditors are doing on a daily basis, as well as explaining the auditing standards, Newman allows the reader to have a front row seat in the world of audit and urges investors to familiarize themselves with its limitations.

First Page

1

Last Page

41

Num Pages

41

Volume Number

26

Issue Number

1

Publisher

Wake Forest University School of Law

Rights

CC-BY 4.0

Recommended Citation

Neal F. Newman, Bridging the Expectations GAAP in Financial Reporting, 26 Wake Forest J. Bus. & Intell. Prop. L. 1 (2025).
Available at: https://scholarship.law.tamu.edu/facscholar/2317

File Type

PDF