TITLE:
Effects of Mandating Audits for Egyptian SMEs on Their Financing Opportunities-Analyzing the Egyptian SMEs Audit Market
AUTHORS:
Mahmoud Galal Abouelghit, Shengdao Gan
KEYWORDS:
Auditing, Mandatory Audits, Egyptian SMEs, Financing, Banking
JOURNAL NAME:
Open Journal of Accounting,
Vol.11 No.2,
April
20,
2022
ABSTRACT: This study investigates the magnitude of the impact of mandatory audits with bank
officers on increasing SMEs’ financing opportunities, reflecting the benefit of
SMEs and the national economy in general. Additionally, this study explores the
audit market for small and medium-sized enterprises (SMEs) in Egypt and the
perceptions between involved parties, especially auditors and owners/managers,
about the role of audits in strengthening this vital sector of the Egyptian
economy. Also, to determine the level of motivation to accept and undertake
mandatory audits for this sector. This study obtained empirical evidence from a survey of 276 bank officers,
304 auditors, 282 SMEs’ owners/managers, and 217 Academics/Economists in
Egypt. Additionally, 41 semi-structured interviews/phone calls; 11 bank
officers, 8 auditors, 13 SMEs’ owners/managers, and 9 academics/economists
asked their opinions about the economic consequences of mandating audits for
the Egyptian SMEs. The results obtained
confirm that mandatory audits for the Egyptian SMEs positively affect their financing opportunities. Also,
mandatory audits for the Egyptian SMEs positively affect the bank
officers’ credit-granting decisions.