Authors: Jonathan Njoku
Addresses: Kuwait-Maastricht Business School, Kazima Street, Block 3, Dasma, Kuwait
Abstract: This paper aims to indicate the relevance of anatomy of bank financial condition in enhancing bank going concern opinion. Within the lens of the audit risk model, implying the need to confer credibility to financial statements, statutory audit pursues processes leading to audit opinion to reflect the going concern status of an audited entity. Critically, the demise of banks with clean audit report during the 2008-2009 global banking crises suggests the need to strengthen the current basis for formulating audit opinion with factors which prove useful in characterising the underlying nature of bank financial condition. Previous studies identified these anatomic factors as market presence, macro-economic condition, deposit fragility, prudence, earnings quality, market power and capital confidence (Njoku and Inanga, 2010). Incorporating these factors in the auditor's judgement process should enhance the effectiveness of audit opinion.
Keywords: agency theory; bank anatomy; bank financial condition; audit opinion; statutory audit; going concerns; global banking crises; audit risk models; auditing; financial statements; market presence; macroeconomic condition; deposit fragility; prudence; earnings quality; market power; capital confidence.
International Journal of Critical Accounting, 2013 Vol.5 No.5, pp.518 - 538
Published online: 29 Apr 2014 *Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article