INDEPENDENT REVIEW OR AUDIT? THE SME IMPLICATIONS WORTH PONDERING

Francois Coetzee () and Pieter Buys ()
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Francois Coetzee: NWU School of Business and Governance, Potchefstroom campus, South Africa
Pieter Buys: WorkWell Research Unit, NWU School of Business and Governance, Potchefstroom campus, South Africa

JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, 2017

Abstract: SME accessibility to finance is widely regarded as a crucial contributing factor to sustainability. It is also generally accepted that access to finance is considerably more difficult for SMEs than for larger corporations. The statutory audit of financial statements for qualifying SMEs in South Africa has been abolished and replaced with the option to do an independent review of the financial statements. This paper considers this abolishment from two perspectives. Firstly, the problem being investigated in this study is whether the lack of audited financial statements has negatively affected SME access to bank financing. This is done by testing the perspectives of SME owners/managers in this regard. A further problem looks at mitigating action SMEs can take to improve their risk profile during a banks assessment of a loan application. Knowledge of basic accounting principles has been identified as a potential mitigating factor by various researchers. This study gains insight into the views and perceptions of SME owners/managers pertaining to their perceived accounting knowledge and or skillsets.

Keywords: accounting proficiency; audit; independent review; SME finance; SME sustainability (search for similar items in EconPapers)
JEL-codes: M13 M41 M42 M48 (search for similar items in EconPapers)
Date: 2017
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http://tbs.ubbcluj.ro/RePEc/bbn/journl/Negotia_2_2017.pdf Revised version, 2017 (application/pdf)

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