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Analysis of auditor`s reports and bankruptcy risk in banking sector in the Republic of Serbia

Author

Listed:
  • Milovan Stanisic

    (Singidunum University, Department for Business Economics, Belgrade, Serbia)

  • Danka Stefanovic

    (Singidunum University, Department for Business Economics, Belgrade, Serbia)

  • Nada Arezina

    (Singidunum University, Department for Business Economics, Belgrade, Serbia)

  • Vule Mizdrakovic

    (Singidunum University, Department for Business Economics, Belgrade, Serbia)

Abstract

This paper aims to point out the significance of external audit and auditor’s reports. The stability of banks and its operations are vital not only for efficient financial system functioning, but also for overall industry. The banking sector, both in developed and undeveloped countries, experienced financial crisis in the last few years. Considering these circumstances and the fact that demands of financial statements users grow in complexity, their control is essential. We provide the empirical evidence on the banking sector auditor’s reports in the Republic of Serbia, with particular reference to auditor’s opinions and audit agencies that had conducted banks audits. The review of the audit legislation and professional standards will be presented, as well as the notion of bankruptcy risk and its relevance for baking sector. Our research results indicate that special attention should be paid to banks which auditor’s report had some explanatory paragraphs or even qualification. In conclusion we highlight the red flags that may damage banks operations and emphasize the importance of keeping the high level of auditor’s independence with the intention to provide confidence to stakeholders who form their decisions based on their reports

Suggested Citation

  • Milovan Stanisic & Danka Stefanovic & Nada Arezina & Vule Mizdrakovic, 2013. "Analysis of auditor`s reports and bankruptcy risk in banking sector in the Republic of Serbia," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 15(34), pages 431-441, June.
    • Handle: RePEc:aes:amfeco:v:15:y:2013:i:34:p:431-441
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    References listed on IDEAS

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    2. Stephen Quinn & William Roberds, 2015. "Responding to a Shadow Banking Crisis: The Lessons of 1763," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(6), pages 1149-1176, September.
    3. Mary Barth & Wayne Landsman, 2010. "How did Financial Reporting Contribute to the Financial Crisis?," European Accounting Review, Taylor & Francis Journals, vol. 19(3), pages 399-423.
    4. Claudia Gabriela Baicu & Olimpia State, 2012. "Banking Models Under the Impact of the Post-Crisis Organizational Changes Apt to Confer Sustainable Financial Stability - Romanian Experience," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(32), pages 436-450, June.
    5. Rada Dakovic & Claudia Czado & Daniel Berg, 2010. "Bankruptcy prediction in Norway: a comparison study," Applied Economics Letters, Taylor & Francis Journals, vol. 17(17), pages 1739-1746.
    6. Fredj Jawadi, 2010. "Financial crises, bank losses, risk management and audit: what happened?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(10), pages 1019-1022.
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    Citations

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    Cited by:

    1. Basak Erdem Rena & Elif Guneren Genc & Fatma Ulucan Ozkul, 2016. "The Impact of the Opinions of the Independent Auditors on the Investor Decisions in Banking Sector: An Empirical Study on the Banks Operating in Turkey," Accounting and Finance Research, Sciedu Press, vol. 5(1), pages 157-157, February.
    2. Dragos Ilie & Laura Ungureanu, 2014. "Survey on the Viewpoints of Credit Beneficiaries Qua Consumers in Order to increase Banking Accountability," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 16(35), pages 138-138, February.
    3. Nora Muñoz-Izquierdo & María-del-Mar Camacho-Miñano & María-Jesús Segovia-Vargas & David Pascual-Ezama, 2019. "Is the External Audit Report Useful for Bankruptcy Prediction? Evidence Using Artificial Intelligence," IJFS, MDPI, vol. 7(2), pages 1-23, April.
    4. Dragos Ilie, 2015. "Credits and Bank Guarantee Letters in Entrepreneurship Development During Crisis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(38), pages 212-212, February.

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    More about this item

    Keywords

    audit; banks; financial statements; insolvency; risk;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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