About the project Distress prediction models in V4 countries and their audit applicability

The audit is a very time- and source-demanding complex process, while its outcome is justification of reflecting true and fair view on companies, based on the verification whether a given business meets the going concern principle. The nature of the process is a complex analysis of the financial position, often requiring comparison with other businesses operating under similar conditions. Such a comparison often requires the possession of expensive databases and very experienced staff. This poses significant challenges on the side of the auditing company and even for the audited company, which is often obliged to undergo an audit process to meet the legislation requirements. The situation is even more complicated when it comes to the situation of small and medium enterprises (SMEs). A large business might be supported by another business entity which is part of the corporate group, and also has greater financial and human resources for preparing financial statements, including assessing compliance with the going concern principle. Compared to that, SMEs are often financially constrained.

Hence, the aim of this project is to create and deliver the users special distress prediction models for V4 countries, which will be made publicly available and help to assess the going concern condition of SMEs from different industries. This tool will make it easier for auditors, managers, business partners, or even employees to understand the financial position of a given SME.