Financial Reporting Quality Labels: The Social Construction of the Audit Profession and the Expectations Gap

Analyses a policy‐making issue concerning historically persistent phenomena with the potential, concurrently, to assist the social construction of the audit profession, and create expectation problems capable of accentuating the present audit crisis. The phenomena are the financial reporting quality labels commonly associated with the auditor′s opinion on the content of reported financial statements. Reveals the close historical relationship of accountancy and law in a process of professionalization in which accountants and lawyers vaguely and ambiguously describe financial reporting quality by means of various labels and supporting criteria. The analysis also suggests the strategic benefits and disbenefits of reporting quality labels and criteria to the audit profession within the context of the expectations gap.