The role of auditing quality as a tool of corporate governance

Abstract

The purpose of this research is to investigate the connection between the quality of auditing and corporate governance. This research also needs to prove that standard audit reports enhance the credibility of financial reports of the audited corporations thus facilitating corporate governance. Sometimes, the basic financial reports do not provide enough info to estimate in a pragmatic way the quality of successful governance. That is why the indicators of successful governance that are gained during financial analysis are needed. The empiric part of research of the factors of auditing quality processes is being done by the method of survey as a questionnaire in order to collect and examine the data, information, attitudes and opinions of the examinees about the topic of research with the usage of sample. For this reason, techniques of direct structural communication are being used-survey sampling. Arguments to prove the theses are carried out using the method of verification. Mathematical-statistical method is used for processing the collected data in those parts requiring quantification. This research was conducted on the territory of FB&H and the samples of research are corporate companies-financial institutions precisely banks. The initial sample for the empirical research of correlation between financial analysis and audit quality corporate companies in the process of business decision-making and management included a list of 15 out of 18 banks in the FB&H. This research has shown that the financial analysis is an important tool that managers use in the governing and that there is a strong connection between the quality of the audit and corporate governance, which brings to the conclusion that in the future corporate governance will be based on audited financial reports. Taking into account that the audit is the process of checking and assessment of financial reports with the aim of expressing an independent and professional opinion on their validity and objectivity, the audit reports are increasingly used as an indispensable source of reliable information on which various forms of financial analysis operates. Audit as a measure of the credibility and impartiality of the content of financial statements directly affects the quality of the information contained in the financial statements. Research limitations/implications-Applicable legal regulations stipulate that the reports of the financial analysis are drawn up, submitted or made public. Also, applicable legal regulations does not stipulate by which indicators the performance of a corporate society can be measured, it is left to the will of the management to decide. That is why there is inequality in informing all interested users of business reports, and the deprivation of information on all significant aspects of the company's operations. [ABSTRACT FROM AUTHOR]