TY  - JOUR
AB  - Purpose This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina.Design/methodology/approach In total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements.Findings The study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia.Practical implications Based on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action.Originality/value Limitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.
VL  - 28
IS  - 3
SN  - 1359-0790
DO  - 10.1108/JFC-11-2019-0155
UR  - https://doi.org/10.1108/JFC-11-2019-0155
AU  - Dimitrijevic Dragomir
AU  - Jovkovic Biljana
AU  - Milutinovic Suncica
PY  - 2020
Y1  - 2020/01/01
TI  - The scope and limitations of external audit in detecting frauds in company’s operations
T2  - Journal of Financial Crime
PB  - Emerald Publishing Limited
SP  - 632
EP  - 646
Y2  - 2024/04/23
ER  -