Sufficiency of Evidence and Documentation as a base for the Quality Opinion of the Auditor of Insurance Companies in Kosovo

Sufficiency of Evidence and Documentation as a base for the Quality Opinion of the Auditor of Insurance Companies in Kosovo PhD, candidate Arta Hoti Assistant, Accounting and Finance Department University Hasan Prishtina Prishtina, Kosovo PhD, candidate Sevdie Alshiqi - Bekteshi Assitant, Management and Informatics Department University Hasan Prishtina Prishtina, Kosovo PhD, candidate Vlora Prenaj Assistant, Accounting and Finance Department University Hasan Prishtina Prishtina, Kosovo ABSTRACT The main purpose of this paper is to analyse the interconnectedness between the performance of auditors and audit function in providing of qualitative opinion through evidence and documenting of auditing in Insurance Companies in Kosovo. Also the other purpose is to provide empirical evidence of whethet the audit function, audit evidence and audit documentation are determining factors in providing a qualitative opinion from the auditor. To achieve the objectives of this paper, this research is based on primary data obtained through questionnaire, which is designed in accordance with elementes of the problem examined. To realize these goals in more realistic ways, we picked sample from the largest Insurance Company ten of them in Kosovo and we distribute these questionnaries in these Insurance Companies. In order to achieve this scientific research we used statistical methods comparability using the algebraic average size, average size and position indicators absolute vatiation.1 We have also applied the three tiered LIKERT2 system, which in our case represents the most appropriate method to make statistical analysis of data obtained through the questionnaire. Keywords: Audit, Audit Function, Evidence, Sufficiency. INTRODUCTION The history of auditing is very old as human itself, it is known very well if we start from the word audit that comes from the Latin word audire that means a hearing. It proves that audit was presented before 2000 years, first in Egypt, in Greece, in Rome and countinouing in other countries 3. Starting from the International Standard on Auditing (ISA) deals with the main duties and responsibilities to prepare audit documentation for an audit financial statement. From this we can say that the evidence of the auditor s basis for a conclusion about the general achievement objectives of the auditor. 4 Based on this we can conclude thet documentary evidence is the most important and most common form of evidence. It applies from bott internal and external, because external evidence is also obtained from the 1 Newbold Paul:Stadstics for Bysiness and Economiss Prantice Hall 1991 2 Vagios, Wode M. (2006) Likert-type scale response anchars. Clemson International Institute for Tourism & Research Development, Department of Parks, Recreation and Touin Menagement. Clemson (level of Consideration) 3 Porter et al, 2000 4 ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing, paragraph 11. Society for Business Research Promotion 64

records of the organization. 5 According to the different literature, analysed and used during the realization of this work as the most inmportant factor for providing a qualitative opinion are: function, audit evidence and audit documentation, where the questionnaire itselfs as an alternative to this research considers results in these factors as the main factors. This scientific research is carried out by methods of statistical comparability, using the algebraic average size, average size and position indicators absolute variation. 6 In order to achieve the main bjectives of this research, we based on primary data obtained through a questionnaire (Annex 1), which is designed in accordance with the elements of the problem examined in this research. Also, we combined other data obtained through references and similar research published by other researchers. To achieve the objectives of this paper, we applied the statistical technique of comparability, also referred to by the income of statistical analysis methods. We have also applied the three-tiered LIKERT 7 system, which in our case represents the most appropriate method to make statistical analysis of data obtained through the questionnaire. Each answer contains its options ranging from (1) reply-to 'disagree' (2) 'partially disagree' and (3) 'disagree'. The questionnaire was sent to all auditors of insurance companies in Kosovo, including External Audit firms who audit Insurance Companies in Kosovo. Research Hypothesis Through this research we tried to test these hypotheses: H1: Qualification, experience and education affect the qualitative opinion from the auditor based on the sufficiency of the evidence and documentation. H2: Giving a qualitative opinion, based on the sufficiency of the evidence and documentation, is the result of the audit function. H3: Giving an opinion depends on the quality of audit evidence are considered more reliable. H4: The importance of documentation of audit quality giving an opinion. The Sample of Respondent This research includes all auditors of Insurance Companies in Kosovo, including external auditors. Unlike other service providers and financial institutions, ex. such as bank, insurance companies have a smaller number of auditors. Average insurance company auditors in Kosovo is 2 (two auditors in a company). 12 companies operating in Kosovo Security, the total number of auditors in insurance companies is 24, the number of companies that answered the questionnaire is 10. Of the total number of auditors are answered 16 auditorium, of which there are 10 valid questionnaires. Research Results Based on data obtained from the first part of the questionnaire (Table 1) we see that the respondents surveyed who have completed bachelor's level have been strictly positive charge, where the number of respondents with bechelor is 7 (10 total), which gives revised average of 1.57, which means that the largest number of respondents completely agreed bachelor. While respondents qualified master are even stricter in response disagree, where the number of respondents with master is 3 (10 total), which gives the correct average 1.41 which means that they were even stricter than those responsible disagree with bachelor. 5 Performance Auditing Guidelines SAI India 6 Newbold Paul:Stadstics for Bysiness and Economiss Prantice Hall 1991 7 Vagios, Wode M. (2006) Likert-type scale response anchars. Clemson International Institute for Tourism & Research Development, Department of Parks, Recreation and Touin Menagement. Clemson (level of Consideration) Society for Business Research Promotion 65

Table 1: Qualification A b a/b Qualification Sum if Count if Average of corr. 1 Average qualification 0 0 #DIV/0! 2 Bachelor 11 7 1.57 3 Master 4.22 3 1.41 1.49 Also from the data obtained from the first part of the questionnaire (Table 1) we see that the respondents surveyed who are certified accountants are hired even more determining factors given in the survey, where the number of respondents is 2 certified accountant (10 total), which gives the correct average of 1.39 which means that they are responsible closer disagree. While respondents are qualified licensed auditor total of 4 (10 total) where their correct average is 1.50 which means that they are closer to disagree partly responsible. But to rest with the highest qualification correct their average is 1.61, which means that questions remain between agree and disagree in part. Table 2: Education A B a/b Education Sum if Count if Average of corr. 1 Certified accountant 2.78 2 1.39 2 Licensed Auditor 6.00 4 1.50 3 Others 6.44 4 1.61 1.50 From the data obtained from the first part of the questionnaire (Table 3) we also share experience, to note that this part of the surveyed respondents have experience in audit work less than 5 years are 5 respondents (10 total) where the average the correct in their responses is 1.59 which means that they are among answer agree and disagree in part. But those with experience 5 to 10 years are a total of 5 (10 are listed) where their correct average is 1.46, which means that they are responsible closer. According to surveys conducted not have auditor with experience more than 10 years who answered the survey filed. Table 3: Experience A B a/b Experience Sum if Count if Average of corr. 1 Less than 5 years 7.94 5 1.59 2 5-10 years 7.28 5 1.46 3 More than 10 years 0 0 #DIV/0! Comparative Statistics and Quality determinants of audit opinion Factors determining the quality of an opinion by the auditor, we compared by statistical analysis (method of average size of algebraic and absolute indicators of variation) using tools: sumif and countif. Sumif tools - used in this research has determined the amount of averages. Counif tools - used in this research has determined the number of respodents. During part of the statistical analysis using the arithmetic mean and standard deviation. Function of Auditor In this research we are using eight factors that characterize the receive of a correct opinion by the auditor. Table 4. contains the results of the questionnaire regarding the functioning 1.52 Society for Business Research Promotion 66

of the audience for each of these factors. Table shows that the majority of respondents consider important factors determining how to as: the role of internal audit in advising the company regarding how to better realize their objectives, the auditor's role in raising reliability of financial reporting, the auditor's role in the detection and investigation of fraud, the auditor's role in improving risk management and to improve the internal control system. Arithmetic average of the answers of the respondents in this category is 1.2, which means that most agree answered the question, while the standard deviation is 0.35. Audit evidence considered more reliable Used five factors that describe cases where audit records considered reliable. Table 4. contains the results of the survey regarding the audit evidence when they are considered more reliable. Table shows that the majority of respondents consider important factors determining how to, as the company's independent sources and not from those dependents, with effective control systems and not from ineffective ones, when they are taken in order to directly and not indirectly, when they are not documented and provided oral and when the original document are not the photocopy. Arithmetic average of the answers of the respondents in this category is 1.26, which means that most of the correspondents agree that the determining factors for the award of an opinion by the auditors are the audit evidence considered more reliable and the standard deviation is 0.43. The importance of documentation for audit Used five factors that characterize the importance of documentation for audit. Table 4. contains the results of the questionnaire regarding the importance of documentation for audit. Table shows that the majority of respondents consider important factors determining how to, as documented for audit work performed in accordance with general principles, to support the opinion expressed, to help members of the audit team who are responsible for overseeing and reviewing the quality of their work, to demonstrate responsibility and various members of the audit team for the work performed, the internal reviewer be in charge of quality control of the company and to help prospective auditors while performing their duties. Arithmetic average of the answers of the respondents in this category is 1.44, which means that it is evaluated at the high importance of audit documentation, and the standard deviation is 0.59. Table 4. Society for Business Research Promotion 67

Testing the hypotheses In this research are reported test results of the research hypotheses using the algebraic average size variation and absolute indicators through tools: sumif and sountif. The objective of this research is to empirically test that the above mentioned factors affecting the issuance of an opinion by the auditor quality in Insurance Companies in Kosovo. Accepted based on the results in Table 1 is the overall average 1.41 to training, to education is 1.50, 1.52 and to experience it. From this we can conclude that a higher level of qualification corresponds with perception more important in documenting the evidence and opinion. Also in the results presented in the table in terms of factors such as the audit function, and sufficient evidence of the importance of audit documentation, we conclude that these three factors affect the achievement of the objective of this research. The results presented: overall average is 1.2 audit function that leads to a positive result of the determining factors for this research, and the standard deviation 0.30. Average total determining factor as audit evidence considered more reliable is 1.3 which results positively in providing a qualitative opinion, and standard deviation 0.4. While the average total factor: the importance of audit documentation is 1.4 which corresponds to what documentation is very important for our opinion. Based on these coefficients we accept as scientists confirmed the above-mentioned hypotheses. According to this research, and the achievement of the main objective, we conclude that the factor most of the respondents admitted to giving an opinion from the auditor's quality: audit function. Summary and conclusions In this paper, the main aim of the research were: Analysis of interconnectedness between the performance of auditors and audit function in providing a qualitative opinion through and documenting audit evidence Insurance Companies in Kosovo. To provide empirical evidence whether the audit function, audit evidence and audit documentation are determining factors in providing a qualitative opinion from the auditor. To achieve our goal we have designed a questionnaire which we have distributed to all Insurance Companies in Kosovo. This questionnaire results in what the auditors considered function, audit evidence and audit documentation as important factors that influence the award of a quality audit opinion. It was identified that the audit function had total average value of 1.2, the sufficiency of the evidence had total average value of 1.3 and the value of the average total for the third factor that is documented is 1.4. Results of statistical analysis that consist audit function is the most important factor in determining the quality of an auditor's opinion, see fig. 1. Figure 1. Disagree, 6, 3% Partly Agree, 52, 25% Agree, 152, 72% According to the research we recommend insurance companies in Kosovo to work to ensure the availability of key factors in order to achieve the quality of the opinion given by the auditor. Society for Business Research Promotion 68

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