Responsibility of Egyptian banks' auditors for going concern assumption in light of Egyptian Central Bank Law No. 88/2003
by Mohamed Khaled Amr ELDaly
International Journal of Economics and Accounting (IJEA), Vol. 3, No. 3/4, 2012

Abstract: In 2003, the Egyptian Central Bank Law No. 88/2003 took place and threatened the continuity of stressed banks by permitting the CBE to merge the stressed banks into forced mergers. As a result, the CBE merged six of the Egyptian troubled banks and evaluated their shareholders equity with zero that leads the banks' investors to lose millions of Egyptian pounds and lose the trust in the Egyptian capital market. Accordingly, this paper aims to investigate to what extent the banks' external auditors fulfil their obligations toward the going concern assumption after the Central Bank Law No. 88/2003 took place. The Egyptian banks have been classified into three classes as follows: 1) Class A banks that were not endangered by the new legislation because their capital exceeded the requirements of Law 88/2003 (excluded from the population). 2) Class B banks that were threatened by the law, however, they successfully complied with the requirements during the allowance period given by CBE (ended July 2005). 3) Class C banks that failed to comply with the legislation and are subject to hostile merger under CBE supervision. The main findings show that for class B banks: only 38% of the audit reports are in conformity to the auditing standard 570-going concern. While for class C banks: only 11% of the audit reports are conformity to the ISA 570. The main findings are consistent with prior researches that provide evidence to the lack of commitments to the international standards among the Egyptian auditors.

Online publication date: Wed, 06-Aug-2014

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