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The main purpose of this study is to gain insight into Bahraini auditors' perceptions of the importance of 17 variables in the assessment of inherent risk of various audit assignments. The study also seeks to examine whether differences exist in the evaluation of variables, influencing the assessment of inherent risk between auditors working for the Big‐Six accounting firms and those working for local or regional firms and between auditors practicing in Bahrain and those practicing in the UK. A questionnaire was distributed and responses from 58 auditors were received. The study found that auditors practicing in Bahrain have difficulties in identifying variables associated with the assessment of inherent risk. Of the 17 variables examined in this study, only six variables were identified by the majority of Bahraini auditors as inherent risk factors. The results also suggest that statistically significant differences exist between auditors working with “Big Six” firms and those working for local/regional firms with respect to identification of selected variables as inherent risk factors and their importance in the assessment of inherent risk. Finally, the findings suggest that UK auditors appear to be better trained than their Bahraini counterparts at identifying factors affecting inherent risk.

This paper aims to investigate firm-level variations in the extent of mandatory disclosures and address the drivers of mandatory disclosure using data from the Gulf Co-operation Council (GCC) region.

The extent of mandatory disclosure is examined using a disclosure index created with reference to 24 International Financial Reporting Standards (IFRSs).

The authors find that the extent of mandatory disclosure required by applicable IFRSs/International Accounting Standards increases with international presence, group firms, the level of voluntary disclosure, firm age and the education level of company financial controllers. It decreases with firm size and the proportion of institutional share ownership. The degree of board independence is positively related to the level of mandatory disclosure in firms with no state ownership. Profitability positively affects the level of mandatory disclosure to a greater extent in more liquid GCC firms. The results confirm that there is a greater sensitivity of mandatory disclosure to loss than to profit. Loss increases, whilst profit decreases, the extent of mandatory disclosure.

The results promote further understanding of international financial reporting differences in an emerging country setting.

The findings provide a detailed insight to investors, financial analysts, practitioners and academics.

The authors develop a highly granular mandatory disclosure index in a developing country setting and identify key drivers of such disclosure.