The Importance of External Audit in Detecting Abnormalities and Fraud in the Financial Statements of Public Enterprises in Kosovo

Abstract

In our paper, we have focused on determinant factors and their impact on the audit of public enterprises in Kosovo. In addition, we have analyzed the impact of audit quality on improving transparency and accountability of public enterprises. The study also assesses factors that affect effectiveness and ineffectiveness of information in the audit reports of the Kosovo National Audit Office. The data were obtained based on observations, documentation, questionnaires and interviews. Respondents were internal auditors of public enterprises in Kosovo as well as external auditors of the Office of the Auditor General in Kosovo. This research was designed using primary and secondary sources of data and was carried out according to statistical analysis methods using the average algebraic size method and absolute variation indicators. The findings of this paper suggest that external auditors consider the potential risk of errors and fraud as being high, that they have aversive attitudes against errors and fraud, and that for them there exists a negative relationship between errors and fraud and financial reporting. Also, the quality of the external audit positively affects the detection of fraud and anomalies within financial statements.