The Impact of the Quality of the Audit Process on the Cost of Financing by Borrowing - An Empirical Study on Companies Listed in the Egyptian Stock Exchange

The importance of auditing and the value it adds to users of financial statements has increased in recent times, especially in light of the recent global economic crisis. Attention has also been paid to the need to define accurately the responsibility of the External Auditor to detect and report on administrative fraud, especially in view of the increasing number of cases of manipulation of financial statements and the significant negative effects on the global economy. In addition to the collapse and bankruptcy of many companies, especially in the United States and Britain, where the collapse of Enron Enron caused huge losses in the financial market and the resulting bankruptcy of a large number of investors and lenders.
The main objective of the audit is to increase the quality and reliability of the financial information, which helps to make sound decisions and thus to direct and make the best use of the resources of the community. The review reduces the problem of information asymmetry between company managers and users of financial statements such as investors and creditors. This was agreed by some (Fernanda, et al., 2008; Chang et al., 2008), who explained that the auditor played an important role in verifying the integrity of information in the financial statements. They emphasized that the high quality of the audit process reduces information asymmetry between managers who have full information and capital suppliers, who do not. The value of audit has increased as it is a form of follow-up and control that restricts management manipulation of financial statements and therefore reduces the risk of information.