Title: A study of compliance with international auditing standards by auditors in Bahrain

Authors: Prem Lal Joshi, Ashutosh Deshmukh, Jasim Al Ajmi

Addresses: University of Bahrain, P.O. Box 32038, Bahrain. ' Sam and Irene Black School of Business, Pennsylvania State University – Erie, 5091 Station Road, Erie PA 16563, USA. ' College of Business Administration, University of Bahrain, P.O. Box 32038, Kingdom of Bahrain

Abstract: Corporations in Bahrain are required to prepare their financial statements using international financial reporting standards (IFRSs), and the external auditors are required to follow international standards on auditing (ISAs). This study investigates the extent to which external auditors in Bahrain comply with the 32 ISAs, and also the problems encountered by them in complying with these standards. All the audit firms located in the Kingdom of Bahrain were surveyed using a pre-tested questionnaire. The results indicate that although the auditors comply with all the standards, their degree of compliance varies with respect to various standards and also by the size of the audit firms. The Big Four firms had a higher level of compliance with the ISAs. The qualitative responses that explained the difficulties in complying with ISAs are also listed in the paper. These results are also compared with the results of a similar study from Jordan. The ISA compliance levels in Bahrain and Jordan are comparable. The study suggests that for a more-effective compliance with the ISAs, regulatory agencies in Bahrain should be strengthened, and training and continuing education of auditors, especially from non-Big Four firms, should be improved.

Keywords: Bahrain; compliance; international standards; auditing standards; ISAs; Big Four-non-Big Four audit firms; international financial reporting standards; IFRS; external auditors; firm size; regulatory agencies; regualtion.

DOI: 10.1504/IJADS.2010.036102

International Journal of Applied Decision Sciences, 2010 Vol.3 No.3, pp.259 - 279

Published online: 19 Oct 2010 *

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