Although previous research generally find bankruptcy prediction models to outperform auditors' going concern opinion accuracy in identifying failing companies, recent research questions whether bankruptcy is the best proxy for assessing going concern since filing for bankruptcy is not synonymous with the invalidity of the going concern assumption. Furthermore, in contrast to debtor-oriented countries such as the US, liquidation is the most likely outcome of corporate insolvency in creditor-oriented countries such as the UK, Germany, Australia and New Zealand. This suggests that bankruptcy prediction models have limited use for assessing going concern in creditor-oriented countries. Previous research has not recognised this distinction between corporate bankruptcy and liquidation in developing statistical models as an audit tool for assessing going concern. This study examines the efficacy of a corporate liquidation model and a benchmark bankruptcy prediction model for assessing company liquidation. It finds that the liquidation model is more accurate in predicting company liquidations in comparison with the benchmark bankruptcy prediction model. Most importantly. Type 1 errors for the liquidation prediction model is significantly lower than for the bankruptcy prediction model, which indicates its greater efficacy as an analytical tool for assessing going concern. The results also suggest that bankruptcy prediction models may not be appropriate for assessing going concern in countries where the insolvency code is creditor-oriented.

PurposeThe purpose of this paper is to investigate the use of the internet as a channel for voluntary communication of financial information by companies listed on two stock exchanges in the United Arab Emirates (UAE). It aims to focus on the extent and variety of internet financial reporting (IFR) by these companies. While IFR has become standard practice, rather than the exception, in most western countries, empirical evidence of the phenomenon in the Middle East region is only just emerging. This paper seeks to contribute to the literature by providing evidence of voluntary use of IFR for communication of financial information by UAE‐listed companies.Design/methodology/approachThe 132 companies listed on the Abu Dhabi Securities Exchange (67) and the Dubai Financial Market (65) in the UAE were investigated to ascertain whether they maintain websites; and if so, whether these sites are being used as a channel for voluntary communication of corporate financial information.FindingsWhile about 87 percent of UAE‐listed companies were found to operate websites, only 88 of these companies (about 67 percent) use their websites to communicate financial information. However, IFR is not restricted to the publication of annual financial statements only as the companies also disclose financial highlights through their websites using a variety of formats including PDF, flash and html.Practical implicationsThe results of this study indicate that, similar to other Middle Eastern countries, IFR is still at an embryonic stage in the UAE and there are considerable opportunities and challenges for all stakeholder parties in corporate communication and reporting. Regulatory authorities may need, at this early stage of development of IFR practices, to develop and establish effective strategies to ensure standard and consistent use of this channel of financial information communication for the benefit of all stakeholders.Originality/valueThe study highlights the challenges and opportunities for IFR in the Middle East Region, where it has been sparsely studied. In particular, it focused on the UAE, where literature on IFR practices is, to the best of the authors’ knowledge, not yet available.

Benford’s Law relies on a recently proven mathematical distribution about the frequencies of naturally occurring numbers that can be efficiently applied to the detection of financial fraud. Despite the value of Benford’s Law for detecting fraud, most financial professionals are often unaware of its existence and how to best utilise the method for fraud detection. The purpose of this paper is therefore to present a systematic methodology for incorporating Benford’s Law for detecting and flagging potentially fraudulent financial transactions, that can be further investigated. This paper describes the development of Benford’s Law and demonstrates how it can be implemented systematically through a spreadsheet program to detect potential fraud. Given that the cost of financial fraud is significant with firms losing up to a tenth of their revenues, the methodology presented in this paper for implementing Benford’s Law can be a valuable tool for auditors and other financial professionals for detecting fraud.

We investigate the key corporate characteristics of using the web for voluntary disclosure of financial information in an emerging economy by companies listed in the United Arab Emirates (UAE). The 132 companies listed on two stock exchanges were investigated to ascertain whether they engage in web-based financial reporting (IFR) or not. Eighty-eight of the companies (about 67%) were found to use their websites for IFR. Similar to prior studies in this area, logistic multiple regression was used to isolate the key corporate characteristics of IFR companies (IFRC) from non-IFR companies (N-IFRC). Results indicate firm size and leverage to be the key determinants of voluntary IFR adoption. Surprisingly, other traditional firm characteristics, such as profitability, industry and liquidity do not explain IFR practices. Policy implications of these findings, as well as the limitations of the study, which provide potential areas for future research, are also discussed.

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to ascertain the practical efficacy of statistical corporate failure models in improving auditors' going concern assessment. It also aims to examine auditors' perceptions of corporate failure models as an analytical procedure in this context. Design/methodology/approach -The paper utilises a survey questionnaire with a case study component to evaluate the practical value of corporate failure models for assessing going concern, and to examine auditors' perceptions of such models as an analytical procedure for assessing going concern. Findings -The results indicate that corporate failure models facilitate the formation of more appropriate going concern opinions and increase judgment consensus. Auditors perceive such models as useful in obtaining relevant evidential matter and in mitigating some of the subjectivity involved in assessing going concern. However, the results also indicate that corporate failure models are perceived to be more effective in the planning stages than at the final stages of the audit. Furthermore, auditors are seeking more explicit guidance in auditing standards on the use of corporate failure models for assessing going concern. Originality/value -The study extends previous research by examining the practical efficacy of corporate failure models for assisting auditors to assess going concern in light of human information processing limitations. Further, it examines auditors' perceptions of corporate failure models as an analytical procedure, and the guidance that auditors seek on the use of such models in auditing standards.