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.
Most entrepreneurs have adequate knowledge and skills, however, they lack internal resources for commercialization of products on foreign markets. This group of entrepreneurs recognizes the chance through collaboration with other organizations, ensuring the engagement of new technologies that contribute to fast and early commercialization on the global market. The focus of this research is related to the analysis of the influence of entrepreneurs' competences on cooperation with the other organization as well as on the internationalization of a new business venture. In order to provide deeper insight, the subject of research is also expanded with the field of new technology usage, as a moderator variable, to consider its role of strengthening the relationship between cooperation with other organizations and internationalization of a new venture. This paper aims to analyse the impact of entrepreneurial competences based on knowledge, skills and abilities (KSA's) on cooperation with the other organization as well as mediating influence of cooperation with other organizations on internationalization of a new venture, in the South East Europe region. The main source of data in this study is the GEM research database for 2013. For this research, the authors included six countries in the research sample of the South East Europe region: Slovenia, Croatia, Hungary, Romania, Bosnia and Herzegovina, and FYR of Macedonia. The results of path analyses of Structure Equation Modelling indicate a positive direct and indirect impact of entrepreneurial intentions on cooperation and internationalization of a new venture. Results also indicate that the usage of new technologies, as a moderator variable, strengthens the relationship between cooperation and internationalization of a new venture.
The main purpose of this paper is to research the factors that have an impact on the company profitability in the logistics industry during a five-year period (2013-2017). The sample includes 748 active companies operating in the logistics industry in the Balkan countries. Bearing in mind that logistics is an essential instrument of competitiveness and profitability of the company operations and that logistics is one of the most profitable industries, this paper used the panel data model with fixed effect in order to analyse profitability. The obtained results showed that four out of the six studied variables (company size, tangibility of assets, liquidity, and asset turnover ratio) have a statistically significant impact on profitability. The results provide guidelines for increasing profitability and improving the performance of logistics companies, given that an efficient planning system, managing and controlling the logistics system are key determinants of profitable business operations.
Companies can use various manipulative techniques when preparing general-purpose financial statements in order to present better financial position and better performance. Fraudulent financial statements can lead their users to wrong decisions and, consequently, cause big losses and distort confidence in the financial reporting system. Therefore, it is important to timely discover and prevent financial reporting frauds. Timely detection of fraud is one of the key tasks of forensic accountants, who should pay attention to fraud indicators, i.e. warning signs of fraud. Warning signs are not evidence of fraud but point to the need for a more detailed investigation. The aim of the research in this paper is to examine whether there are warning signs and to understand the degree of fraud risk in financial reporting by analyzing financial statements of companies in the Republic of Serbia. The research is conducted on a sample of 42 companies. By applying the Beneish model, we find that the general fraud risk is not insignificant. Borrowing activities of companies are identified as a significant source of this risk, while forensic accountants should pay special attention to income recognition and accrual items, i.e., items related to recognition of income and expenses before or after cash inflows or outflows, including depreciation. Higher risk of fraud is identified in manufacturing companies and financial institutions than in trade and service companies. The research results indicate the need to strengthen the mechanisms of financial reporting control in the Republic of Serbia.
The paper investigates the main micro-specifi c profi tability determinants of the insurance industry in Serbia, covering the period 2008-2016. Data set includes accounting ratios for 19 universal insurers, offi cially reported by the National Bank of Serbia (NBS). We have estimated the fi xed effects model using the OLS and GLM estimation procedures, with return on asset (ROA), return on equity (ROE) and return on total premium (ROTP) as the response variables. The estimated results from different models are quite consistent, with some minor deviations related mainly to the magnitude of the effects. Specifi cally, there is a trade-off between liquidity and profi tability, and the insurance companies exploit economies of scale extensively. Loss and risk exposure have signifi cant adverse effect on profi tability, while productivity proved to be not signifi cant. In addition, the relative market power (market position) and size have signifi cant positive impact on profi tability, while business specialization favors insurance over reinsurance, particularly the life-insurance business, as well as the business specialization dummies (insurance vs. reinsurance, life vs. nonlife insurance). Consequently, an optimal profi tability strategy should be based on mergers and acquisitions, appropriate risk-taking and risk-management practices, and business sophistication through specialization. In addition, the companies should weight costs and benefi ts of keeping an excess of liquid reserves. The results also indicate further market concentration due to the size effects, and it could result in higher prices and lower quality of the services. This in turn imposes the new regulatory challenges in terms of the optimal antitrust strategy and appropriate quality control. The implications of these fi ndings are applicable to other Western Balkan countries, especially to Bosnia and Herzegovina and Macedonia.
The primary aim of this paper is to determine the indicators that have an influence on the company growth in the field of agriculture, forestry, and fisheries during the six-year period (2014–2019). This sector is very important for sustainable development, bearing in mind the need to preserve natural resources, i.e., land, water, plant, and animal resources. Sustainable development of this sector is of satisfactory technical-technological development, economically sustainable, and socially acceptable. The sample consists of 1333 observations of active companies on the European market. Multiple regression analysis was used in order to thoroughly analyze the variables of growth. The obtained results showed that company size has a negative impact on growth, while return on assets and leverage have a positive impact on growth. The impact of these variables was statistically significant. Along with the influence of observed determinants based on data from financial statements, the future growth and development of companies in this sector will certainly depend on the volume of investments, pricing policy, credit and natural conditions, agricultural policy measures, and adequate institutional support through the provision of financial support and encouragement of exports of products. Institutional incentives for more intensive integration of the agriculture, forestry, and fisheries sector are aimed at achieving the concept of integrated sustainable development.
This paper aims to investigate the main drivers of sustainable profitability trends in the Serbian insurance industry over the years 2008–2019 (inclusive). Our study is motivated by the fact that insurance companies contribute to economic growth, and thus it is essential to understand the factors that contribute to their financial strength and stability. We use a set of standard panel regression models, including the mixed-effects model, followed by a more robust GMM estimation to uncover the linkage between selected micro-specific, macroeconomic, and institutional factors, and return of assets (ROA) and return on total premiums (ROTP). The present paper constitutes a significant contribution to the existing literature on the account of its comprehensiveness both in terms of the institutional datasets that we use, and in terms of the methodologies we apply (in particular, mixed effects and the generalized method of moments (GMM)). The estimated parameters are model-specific, and we find that firm size, GDP, the population growth rates, political stability, and the degree of specialization (in some empirical models) all lead to higher profitability. On the other hand, we observe that excessive risk-taking and inflation (in some specifications) are inversely related to profitability. Finally, we note that regulatory quality, average wage, and life expectancies are found to be not statistically significant. Accordingly, we argue that a profitability-centric managerial strategy should be based on expanded market share and stringent risk management protocols. At the macro level, we conclude that pro-growth and pro-population policies, combined with a well-oiled institutional setting that ensures political stability, constitute the best possible prescription for strong operational performance and profit sustainability in the Serbian insurance industry.
The aim of this paper is to examine the influence of enterprise characteristics on the degree of application of fraud prevention measures. In addition, this paper is supposed to show whether respondents' characteristics affecttheir opinion about the effectiveness of different fraud prevention measures, as well as if there is a difference between the degree of their implementation and respondents' opinion on their effectiveness. The research was conducted in November 2018 and the data were collected using a questionnaire which was taken overto a great extent from N'Guilla Sow, Basiruddin, Mohammad and Zaleha Abdul Rasid [17, pp. 514-517]. Although the non-parametric statistical techniques used showed that there is (1) no influence of enterprise characteristics on the existence of fraud prevention measures and (2) no influence of respondents' characteristics on their opinion about the effectiveness of fraud prevention measures, the median analysis showed that there is some influence. We have also found that there is some difference between the level of existence of the said measures and respondents' opinion about their effectiveness.
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