COVID-19 effects on the going concern audit opinion in MENA region: Text mining approach

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Abstract

The COVID-19 pandemic has affected the economic sector, especially the audit task that requires the physical intervention of the auditor. The aim of this paper is to study the effect of COVID-19 on audit opinion in the MENA region through a novel text mining approach. The collected data included 83 bank reports from 377 branches in 14 MENA countries. The text mining approach was employed using Python software via corpus creation, tokenization, stop words removal, stemming, and feature selection. Afterwards, a univariate analysis was performed to delineate the variables that are significantly associated with COVID-19, followed by a linear regression model quantifying the relationship of the variables. The results of the text mining process led to the creation of a dictionary composed of 8000 words. After the text mining steps, 10 variables were obtained. The univariate analysis showed that 3 out of 10 extracted variables were associated with COVID-19 and a linear regression equation was accordingly generated. Our research revealed that, in the MENA region, the COVID-19 pandemic led to an increase in the audit workload and risk assessment, yielding an overall unfavorable audit opinion. Finally, the authors used similar techniques to the research of Wei, Li, Zhu, and Li (2019) and Boskou, Kirkos, and Spathis (2018).

Keywords: COVID-19, Going Concern, Opinion, Assessment, Audit, ISA, Text Mining

Authors’ individual contribution: Conceptualization — K.F.; Methodology — S.M. and J.H.; Software — S.M.; Validation — S.M. and J.H.; Formal Analysis — S.M. and J.H.; Investigation — J.H. and K.F.; Resources — K.F.; Data Curation — J.H., K.F., and S.M.; Writing — Original Draft — J.H., K.F., and S.M.; Writing — Review & Editing — S.M. and K.F.; Supervision — K.F.; Visualization — S.M.; Project Administration — K.F.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Authors would like to show their gratitude to Dr. Anis Hoayek, Associate Professor at “Ecole des Mines of Saint Etienne”, France, for his technical assistance and comments that greatly improved this paper.

JEL Classification: H12, M42

Received: 21.06.2022
Accepted: 03.10.2022
Published online: 05.10.2022

How to cite this paper: Feghali, K., Hallak, J., & Moussa, S. (2022). COVID-19 effects on the going concern audit opinion in MENA region: Text mining approach. Risk Governance and Control: Financial Markets & Institutions, 12(3), 49–60. https://doi.org/10.22495/rgcv12i3p4