External Auditor’s Responsibility Regardying to Going Concern Assumption in His/Hers Report: Case of Kurdistan Region/ Iraq

Abstract

This research mainly focused on the external auditors’ responsibilities in Kurdistan regarding the going concern assumption which consider the future financial conditions of the companies. We interviewed two professional individuals in the Directorate of financial supervision office who are auditing both governmental organizations and private sectors in Kurdistan region. Likewise, 4 owners of the companies who have faced bankruptcy risk in Kurdistan have been interviewed as well. Their main job was manufacturing before they have failed. The purpose of this research is to persuade the companies and external auditors that the external auditor can play a significant role in recommending the companies to improve their financial situations.

The role of internal control in fraud prevention and detection

“…An individual cannot achieve his/her desires easily. Thus, people might easily involve in conducting financial crimes especially fraud (Noori & Rashid, 2017).…”

Financial ratios analysis and companies' liquidity evaluation

“…Nowadays, the financial analysis of an enterprise is one of the main prerequisites for the successful management of financial resources and, according to several scientists, is one of the most significant elements of financial management (Noori & Rashid, 2017). The efficient operation of a company requires economically well-founded management decision-making, which is based on the analysis of current operating and financing activities.…”

The effect of capital structure on firm profitability

“…the least costing source of corporate finance is the retained earning which is not have related costs as it does not obtained from outside sources. more use of debt to finance business investments which has the more probability of cost rising and thus, increase the financial risk because the firms should carefully look to the priority of the structure of debt, debt maturity, decision of mixed debt and other types of debt contracts (Peirson, Brown, Easton and Howard, 2002;Barclay et al, 2003;Noori & Rashid, 2017).…”

“…The cost of the issuing new stocks is dividend for the stockholders. Tax relief can be deductible expenses for cost of debt, while common and dividend of the common stock and preferred stocks do not have tax deductible (Rashid & Noori, 2017). One prominent way to find out the operating and financial characteristic with ability and efficiency of business management unit is financial analysis ratio, as reflected in the financial statements and reports (Amalendu bhunia, 2010).…”