The Contribution of External Audit to Business Resilience in Lebanon during Crises

Abstract

The contribution of external auditing to the resilience of companies in Lebanon during times of crisis, examined through a qualitative study based on semi-structured interviews with six auditing firms, highlights its essential role amid the crisis that has affected the country since 2019. Amid the collapse of the Lebanese pound and ongoing economic instability, which significantly complicated corporate accounting, external audits emerged as a vital tool. Auditors ensured that accounting operations were recorded using the official exchange rate of 1,507.5 Lebanese pounds when preparing the tax declarations of audited entities for the years 2020 to 2022. In the context of unclear and ambiguous legislation, auditors also played a role in preventing tax avoidance. They provided continuous oversight of company operations, monitored financial management, ensured accurate inventory tracking, validated the reliability of financial statements, enforced tax declaration deadlines, offered strategic recommendations, and verified their implementation. These interventions contributed significantly to maintaining the resilience of Lebanese enterprises during the economic downturn. In 2023, following the stabilization of the exchange rate at 89,500 Lebanese pounds, auditors continued to verify the accuracy of financial transactions based on the daily exchange rate and ensured the proper closure of prior fiscal years, thereby enabling the preparation of reliable financial statements. The findings of this study underscore the pivotal role of external auditing as a cornerstone of corporate accounting resilience in Lebanon, helping businesses navigate and survive periods of severe uncertainty.