Babatunde Adisa Agbeyangi, Oluwatobi Nurudeen Ogunnusi & Abiodun Abel Oderinde

The financial performance of Nigerian listed manufacturing companies relies significantly on the effectiveness of the auditing process they undergo. This study focused on investigating the impact of the Audit Expectation Gap (AEG) on the performance of listed manufacturing companies in Nigeria. The AEG arises from the difference between auditors' defined roles as per the law and the perceived roles assigned to them by users of audited financial statements. A survey research design was adopted, employing a cross-sectional field survey. The use of structured questionnaires facilitated data collection from three quoted manufacturing companies in Nigeria. The survey targeted a purposive sample of 25 audit and management staff from each selected company, totaling 75 respondents. The results of the study revealed that variations in return on assets (ROA) and return on equity (ROE) were attributable to discrepancies in detecting errors, frauds, and auditors' opinions expressed in the audited financial statements. Notably, the independent variables related to prevention of errors and frauds, and the opinions on audit expectation gaps demonstrated significant correlations with the dependent variables (p-values < .05). In conclusion, the audit expectation gap was found to have adverse effects on the auditing profession, particularly due to its positive influence on the return on assets and return on equity, which are vital performance indicators for listed companies. To address this issue, it is recommended that the audit profession should embrace modified responsibilities as demanded by users of audited account with the aim of enhancing both ROA and ROE performance metrics. Keywords: Audit Expectation Gaps, Financial Performance, Errors and Fraud0150