Purpose This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina. Design/methodology/approach In total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements. Findings The study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia. Practical implications Based on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action. Originality/value Limitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.
Dividend policy is one of the most controversial areas of corporate finance. The paper presents the results of the research in the banking sector of the Republic of Serbia. The specific characteristics of the financial sector make the research on dividend policy determinants additionally complex. This study aims to determine the factors of dividend policy in the Serbian banking sector in the period 2009–2018. The model of random effects was chosen to test the relationship between dividend determinants and dividend payout. Empirical results show that previous years’ dividends have a significant positive effect on dividend policy. Individual investors can benefit from the research to a great extent, as well as bank managers, when creating dividend policies that would contribute to maximising profit and satisfying the needs of employees and shareholders in the long run.
This paper aims to examine solvency and fixed assets financing of Agriculture, Forestry and Fishing sector (Sector A) in the Republic of Serbia. We also examine whether there is a difference between this Sector’s enterprises and entrepreneurs regarding these two aspects of their financial position. The research is based on the Financial Statements Annual Bulletins available on the official website of the Serbian Business Registers Agency. The period of six consecutive years is covered (2013-2018). Solvency and fixed assets financing were analyzed separately for Sector A enterprises and entrepreneurs. Standard ratio indicators were used to determine these relevant aspects of financial position. The conducted analysis showed differences between this Sector’s enterprises and entrepreneurs regarding the solvency. The research results revealed that, despite a slight improvement in certain solvency indicators, entrepreneurs were insolvent during the observed period. The fixed assets financing indicators showed that the lack of equity for new investments financing was compensated mainly by long-term borrowing at enterprises’ level and by short-term borrowed sources at entrepreneurs’ level.
Successful and long-term compliance of insurance company’s operations with assumed risks is of fundamental importance for the economic system. Starting from the social significance of insurance institution and the need for stability in this activity, the systematization and analysis of the independent auditors’ reports of insurance companies’ financial statements between 2009 and 2016 was conducted. The structure and frequency of qualifications in auditors' reports, which are the result of non-compliance with financial reporting standards, were analyzed. All insurance companies are stratified to companies that were always issued auditor’s unmodified opinion in the observed period and companies that were at least once issued some form of qualification in the observed period, including the reasons for issuing unmodified opinion with on emphasis of matter. The results of the analysis showed that companies with unmodified opinion were mostly profitable, of foreign capital origin, and engaged auditors of the “Big Four”. Companies that were at least once issued some form of qualification in auditor’s opinion are predominant in the insurance sector, mostly operated at a loss and were of domestic sources of financing. Companies that were continuously issued modified opinion disappeared from the insurance market, entered into a voluntary liquidation procedure, or their operating license was revoked. Moreover, the frequency of certain audit firms in the verification of companies’ financial statements was analyzed. The results show that PWC audit firm had the largest participation in the audit of insurance companies, Deloitte of companies which were issued modified in opinion, while KPMG auditing firm reported the highest number of unmodified opinions in the insurance sector.
The paper first explains the role, importance, and objectives of the external audit of banks through their most important definitions, thus illustrating the subject and aim of the research. The methodology of the research and data on the sample are presented afterwards. Results of the questionnaire survey which comprised 28 banks in the Republic of Serbia (RS) show what bankers prefer, and compared to global experience there is no significant difference. As a final point, the inherent limitations of the research and concluding remarks are presented
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