Authors: Jonathan Njoku
Addresses: Kuwait-Maastricht Business School, Kazima Street, Block 3, Dasma, Kuwait
Abstract: This paper aims to address what it sees as twin evils of bank going concern secrecy. The statutory bank auditor in line with SAS 59 evaluates client going concern through the audit risk model. Nonetheless, frequent cases of audit failure for banking firms suggest the need to strengthen the audit risk model-based standards. Critically, the investing public face twin evils of bank going concern failure. On the one hand, bank supervisors refuse to share knowledge about bank financial condition publicly. On the other hand, bank auditors with responsibility to warn the public about bank going concern threats follow model standards that appear not to work. The twin evils commend the feasibility of the auditor borrowing the surveillance approach of the bank supervisor. Knowledge of what is known placed with the statutory auditor effectively overcomes the public secrecy of bank supervisory auditor, enabling the independence of the statutory auditor to place it at the public domain.
Keywords: going concern opinion; bank anatomy; bank financial condition; audit risk model; off-site surveillance; bank going concern; secrecy; audit failure; banking industry; auditing; bank supervisors; bank auditors; statutory auditors.
International Journal of Critical Accounting, 2014 Vol.6 No.3, pp.233 - 257
Published online: 30 Aug 2014 *Full-text access for editors Access for subscribers Purchase this article Comment on this article