RJOAS, 12(72), December 2017 124 DOI https://doi.org/10.18551/rjoas.2017-12.16 THE PUBLIC SECTOR AUDIT EXPECTATIONS GAP IN INDONESIA: PAPUA PROVINCE Lamba’ Ramasoyan Arung, Djamhuri Ali, Andayani Wuryan Faculty of Economics and Business, University of Brawijaya, Malang, Indonesia *E-mail: ramasoyan.al@gmail.com ABSTRACT This study aims to examine the opinions of public sector auditors with the perceptions of users of financial statements on audited reports in Papua province. The population in this study is the external auditor of the public sector represented by BPK, the users of the financial statements represented by the DPR, Local Government (Pemda), and the Community (Accounting Students, KAP) existing in Jayapura City of Papua Province. Sampling method using survey method with sampling tool changed the questionnaire that spread in four categories of respondents. KEY WORDS Expectation Gap, accountability, audit concepts, users of financial statements. Public sector audit currently assessed by the government is not transparent to the public regarding the actual financial condition. The vulnerability is the misuse of funds in the public sector so that strict rules and independent audits are required to audit the financial statements of government agencies. Audit of the public sector is very important, it is a form of responsibility of central and local governments to account for funds that have been used by an agency. The public also has the right to be able to know the allocation of the use of funds whether it has been implemented according to existing procedures and standards or not. Good governance is characterized by three main pillars which are the interrelated elementary elements (Prajogo, 2001), namely; participation, transparency and accountability. Good governance must open the door as wide as possible so that all parties involved in the government can participate. The Supreme Audit Agency or Badan Pemeriksa Keuangan (BPK) as the external auditor and state institution having a constitutional mandate to investigate or audit the responsibility of state financial management by the government, including local government (Pemda). Community participation is a manifestation of the demands of public accountability and regional autonomy. Problems with accountability can occur if local governments do not present a financial statement information that is relevant, reliable, and understandable to the community as its constituency (Mahmudi, 2007). The Govermental Accounting Standards Board (GASB) in Concepts Statement No.1 on Objectives of Financial Reporting states that; accountability is the basis of financial reporting in government. The financial statements published by the local government should be fairly presented free from material misstatements so as not to mislead the users of the financial statements. The expectations of the users of the audit financial statements often go beyond the roles and responsibilities of the auditor. The high public demand for auditor professionalism leads to the large expectation gap (Yeni, 2000). Guy and Sullivan (1988) argue that differences in public expectations and auditors can lead to several things, including: (1) fraud detection and illegal acts, (2) improving the effectiveness of audits, (3) communicating more intensive audit results to the public and committees audit. Research on the expectation gap in the public sector in Indonesia, especially in the region of Papua is still very rarely studied. Broad regional autonomy is given to regional governments in order to improve the efficiency, effectiveness, and accountability of local governments that are ultimately expected to achieve good governanc. So the researcher wishes to investigate whether or not there is an expectation gap between external auditors