Application of the AHP Method in Modelling Criteria for Ranking Audit Firms in Serbia

Nedeljković, Dragan and Jovanović, Marko and Simićević, Katarina (2014) Application of the AHP Method in Modelling Criteria for Ranking Audit Firms in Serbia. In: Book of abstract International May Conference on Strategic Management - IMKSM 2014. University of Belgrade, Technical Faculty in Bor, Management Department, Belgrade, pp. 988-989. ISBN 978-86-6305-019-8

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Abstract

This paper discusses the issue of ranking the leading audit firms in Serbia by applying modern methods of multicriteria decision making. The accent is placed on multicriteria analysis methods used to rank audit firms, with a special emphasis on the AHP method. Bearing in mind that this issue has not been sufficiently researched in our country, the main objective of the research was to explain the role and importance of multicriteria analysis methods, as well as to develop theoretical methods and multicriteria analysis models that can be successfully applied in practice to understand and fix problems occurring in audit firms business activities. In the first part, the focus is on an audit firm as a business entity, operating principles, where the principles of liquidity, efficiency, profitability and capital adequacy are explained. Also, quality measurement of audit firms business performance expressed through financial indicators is also explained. In the second part of the paper basic theoretical assumptions of decision- making are given, whereby the accent is placed on multicriteria decision making. The method of defining the problem and formulating mathematical models for multicriteria analysis are presented, as well as the concept and types of attributes, quantification of qualitative data and scales used to quantify relationships between alternative-criterion pairs. The third part of the paper is devoted to the results of an empirical analysis of the possibility to apply one method of multicriteria analysis of the AHP method, acquired on an audit firms gathering. The final conclusions regarding the possibility of using this method for ranking are then presented.

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