The Importance of External Audit in Detecting Abnormalities and Fraud in the Financial Statements of Public Enterprises in Kosovo

Hysen Ismajli,Vlora Prenaj,Edona Perjuci,Medina Braha

doi:10.15388/ekon.2019.1.8

Hysen Ismajli, Vlora Prenaj + Show 2 more

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https://doi.org/10.15388/ekon.2019.1.8

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Journal: Ekonomika	Publication Date: Apr 17, 2019
Citations: 3	License type: CC BY 4.0

Affiliation: University of Prishtina, International Business School

Abstract

[full article and abstract in English] This paper focuses on determinants and their impact on the audit of public enterprises in Kosovo. In addition, it analyzes the impact of audit quality on improving the transparency and accountability of those enterprises. The study also assesses factors that affect the effectiveness and ineffectiveness of information in the audit reports of the Kosovo National Audit Office. The data were obtained based on observations, documentation, questionnaires, and interviews. Respondents were internal auditors of public enterprises in Kosovo as well as external auditors of the Kosovo National Audit Office. This research was designed using primary and secondary sources of data and was carried out in accordance with statistical analysis methods using the average algebraic size method and absolute variation indicators. The findings of this paper suggest that external auditors consider the potential risk of errors and fraud as being high, that they have aversive attitudes against errors and fraud, and that there exists for them a negative relationship between errors, fraud and financial reporting. Also, the quality of external audit positively affects the detection of fraud and anomalies within financial statements.

Highlights

Techniques and tools adopted either in Europe or in the other continents after the recent financial crisis have focused on the urgent need to stabilize financial systems
Secondary data includes international auditing standards for the public sector, Public Enterprises reports, Policy and Monitoring Unit of Public Enterprise (PMUPE) reports, its implementation, as well as audit reports of public enterprises published by the KNAO
Primary data includes responses from questionnaires and interviews conducted with the leaders and internal auditors of public enterprises in Kosovo as well as with auditors of the KNAO who had been involved in auditing public enterprises

Summary

Introduction

Techniques and tools adopted either in Europe or in the other continents after the recent financial crisis have focused on the urgent need to stabilize financial systems. Crisis, public or private audit has being given more and more attention everywhere in the world. In this regard, it is important to point out that auditors have an important role and are obliged to adhere to the highest ethical and professional standards. It is important to point out that auditors have an important role and are obliged to adhere to the highest ethical and professional standards This trust and responsibility given to auditors is an answer to their obligations to the general public to provide a professional opinion on the fair and honest reflection of the financial statements of various enterprises. Many stakeholders whose decisions are affected by audit reports express doubts and concerns about the relevance and reliability of audit reports, especially after the recent financial crisis and its repercussions (Haddrill 2010)

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