The impact of using modern financial indicators as a tool for Evaluating financial performance and going concern in accordance with International Standard on Auditing (570)
DOI:
https://doi.org/10.25007/ajnu.v11n2a1170Abstract
This study aimed to point to the possibility of using modern financial indicators in evaluating the financial performance for an economic unit and the ability of ongoing its activity in the future, and modern statistical tools were shed lighted on the Quantitative Analytical and Discriminatory Multivariate Approach (MAD) and by selecting (Altman Z –score & Sherrod) models, which were projected on the financial statements of the unit in order to give results that are Analyzable, in order to know the prevailing financial status in the economic unit, and to predict what this situation will be in the future, and to identify all the imbalances that may lead the unit to bankruptcy to take Appropriate decisions and corrective actions if necessary.
The study also aims to highlight the responsibility of the auditor in accordance with the requirements of international auditing standards and highlight his role and its importance when giving an opinion on the continuity of the economic unit by relying on modern financial indicators for financial analysis in order to judge the economic unit’s potential in the future, and to reveal all potential financial risks that may be possible that leads to financial failure and bankruptcy, as well as determining the importance of forecasting it, in addition to the main audit procedures followed in forecasting financial risks and the extent of the auditor's commitment to his responsibilities in accordance with International Auditing Standard No. (570). To achieve its goals, also it works to evaluate the activity performance of all accounting, financial and operational, which makes the external audit to play an important role in assisting the economic unit management in its various responsibilities to taking appropriate decisions and corrective actions to avoid bankruptcy.
One of the most important findings of the research is that the modern financial indicators used in the analysis, are considered as a tool that helps the auditor and financial analysts to assess financial performance and know the extent of the economical unit ability to go on in the foreseeable future. It is also possible to rely on modern financial indicators to reveal strengths and weaknesses and the future financial risks of the economical unit forecasts through an analysis process, including decision-making and corrective actions.
The research recommends the necessity of using modern financial indicators to support International Auditing Standard No. (570) to audit and know the appropriateness of imposing going concern in economical units, to enable their administration to predict the future of all units periodically, through it the administration can identify the constituents and difficulties facing its continuation in the future to be addressed.
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