Using the Analytical Procedures to Predict the Failure of Business Organizations “Field Study on Auditing Offices in Kingdom of Bahrain”

Abstract

The Study aims at knowing the effects of the analytical procedures on the ability to predict the financial failure in the Kingdom of Bahrain. The suitable hypotheses have been made concerning the abnormal clauses and guidelines. Therefore, a questionnaire has been prepared and distributed to all auditing offices in the Kingdom of Bahrain. The samples of study are 35 auditors.

The Study Produces the Following Results:

There is a statistically functioning relation between the analytical procedures and the abnormal clauses discovered in the financial statements by the external auditors in the Kingdom of Bahrain. The value of correlation coefficient amounts to (.421) and this value statistically functions at (?   The results show that the analytical procedures explain 117% of the difference.

There is a statistically functioning relation between the available analytical procedures and the ability to discover the indicators of the warnings about the companies early enough before their bankruptcy. The correlation coefficient amounts to (.553) and this statistically functions at (? The results show that the warnings about companies if found early enough before their bankruptcy they shall explain 305 % of the difference.

Important Recommendations

Legislation must be enacted to oblige the companies to reveal the abnormal clauses in their financial statements if their relative significance exceeds 3% of the total budget.

Raising the awareness among companies to issue guidelines for predicting any future financial failure and about their importance in determining the future strategies

Keywords: The analytical procedures, The abnormal clauses in the financial statements Discovering guidelines, Predicting the inability of the companies, Analytical Operations Are Carried out, Normal Modeling approach