Audit Quality Improvement Model in the Economic Environment of Iran

Iranian Journal of Accounting, Auditing and Finance

مقاله 7، دوره 7، شماره 1 - شماره پیاپی 22، فروردین 2023، صفحه 109-127   

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2023.43114.1248

نویسندگان

Ali Akbar Javan^* ؛ Jafar Babajani؛ Farrokh Barzideh؛ Mohammad Marfou

Faculty of Management and Accounting, Allameh Tabatabai University, Tehran, Iran

چکیده

Audit quality is one of the critical topics in the area of capital markets. Financial reporting quality plays a vital role in building trust and confidence with the users of financial statements. Achieving high-quality financial reporting depends on the accuracy of each component of the supply chain's operation. External audit, as one of the most critical components of this chain, plays a significant role in maintaining and improving the quality of financial reporting. Therefore, employing the fuzzy Delphi method and aggregating experts’ opinions, this study attempts to identify the indicators of audit quality improvement and design a model suitable for the economic environment of Iran using the confirmatory factor analysis (CFA) technique. To this end, following the International Auditing and Assurance Standards Board (IAASB), 60 indicators are identified and categorized into five dimensions: A) input factors with 21 indicators, B) process factors with 10 indicators, C) output factors with 9 indicators, D) key interactions with 10 indicators, and E) contextual factors with 10 indicators. Data analysis is performed using R and AMOS software programs. The results of this study demonstrate that 54 indicators are accepted that create a model for audit quality improvement.

کلیدواژه‌ها

Assurance Standards Board؛ Audit Quality؛ Financial Reporting Quality؛ Financial Reporting Supply Chain؛ International Auditing

مراجع

1. Alavi, S.M. and Vakili-Fard, H.R. (2021). The Impact of the Public Accounting Firm Size on Quality of Audit Reports issued by Iranian Association of Certified Public Accountants (IACPA) Member Firms. Management Auditing and Accounting Science, 37(10). pp. 11-24. (In Persian). https://jmaak.srbiau.ac.ir/article_17177.html
2. Alavi, S.M., Ghorbani, B. and Rostami, V. (2015). Investigating the Factors Affecting the Quality of Auditing in Iranian Association of Certified Public Accountants. Auditing Science, 60(11), pp. 47-70. (In Persian). http://danesh.dmk.ir/article-1-1100-fa.pdf
3. Ataei, M. (2010). Fuzzy Multi-Criteria Decision Making, Shahrood University of Technology, Shahrood, Iran (In Persian).
4. Babajani, J., Shekarkhah, J. and Ebrahimpour, SH. (2018). A Model for Implementation of Audit Organization’s Accounting Standards in the Public Sector Institutions of the Islamic Republic of Iran. Journal of Financial Accounting, 4(10), pp.1-20. (In Persian). https://dx.doi.org/10.22108/far.2019.113866.1338
5. Baghian, F., Hejazi, R. and Emamverdi, GH. (2020). Presenting a Model for Audit Quality based on Behavioral Approach (Grounded Theory). Journal of Audit Science, 79(20), pp. 178-200. https://www.sid.ir/paper/968126/fa
6. Bing, J., Huang, C. X., Li, A. and Zhu, X. (2014). Audit quality research report. Australian National Centre for Audit and Assurance Research, Canberra, 1(1), pp. 1-37.
7. Bonner, S. (2008). Judgment and Decision Making in Accounting. Upper Saddle River, NJ: Pearson Prentice Hall. New Jersey
8. Catanach, W. (1999). The International Debate over Mandatory Auditor Rotation, A Conceptual Research Framework. Journal of International Accounting, Auditing and Taxation, 8(1), pp. 43-66. https://doi.org/10.1016/S1061-9518(99)00004-X
9. Delbary Ragheb, M., Esmaeilzadeh Magharri, A., Keyghobadi, A.R., Tavangare Hamzeh Koaei, A. (2022). Presenting Components of Independent Audit Quality with an Emphasis on Meeting Stakeholders’ Needs. Accounting and Auditing Review, 29(2), pp. 264 – 286. https://doi.org/10.22059/acctgrev.2021.320583.1008535
10. Duff, A. (2009). Measuring Audit Quality in an Era of Change: An Empirical Investigation of UK Audit Market Stakeholders in 2002 and 2005. Managerial Auditing Journal, 24(5), pp: 400-422. https://doi.org/10.1108/02686900910956784
11. El-Dyasty, M.M. and Elamer, A.A. (2020), The Effect of Auditor Type on Audit Quality in Emerging Markets: Evidence From Egypt, International Journal of Accounting & Information Management, 29(1), pp. 43-66. https://doi.org/10.1108/IJAIM-04-2020-0060
12. Esplin, A., Jamal, K., and Sunder, S. (2018). Demand for and Assessment of Audit Quality in Private Companies. Journal of Accounting, Finance and Business Studies, 54(3), 319–352. https://doi.org/10.1111/abac.12138
13. Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., and Tatham, R. L. (2010). Multivariate Data Analysis. Upper Saddle River, NJ: Pearson. New York
14. Harman, A., and Press, S.J. (1975). Collecting and Analyzing Expert Group Judgment Data. RAND CORP SANTA MONICA CALIF. Santa Monica, California.
15. Herrbach, O. (2001). Audit Quality, Auditor Behavior and The Psychological Contract. The European Accounting Review, 10(4), pp. 787–802. https://doi.org/10.1080/09638180127400
16. Hooman, H. A. (2013). Structural Equation Modeling with LISREL Application. SAMT. Fifth Edition. Tehran, Iran. (In Persian).
17. Horton, J., Livne, G., and Pettinicchio, A. (2021). Empirical Evidence on Audit Quality Under a Dual Mandatory Audit Rotation Rule. European Accounting Review, 30(1), pp. 1–29. https://doi.org/10.1080/09638180.2020.1747513
18. IAASB. (2011). Audit Quality an IAASB Perspective. New York. www.iaasb.org
19. IAASB. (2014). A Framework For Audit Quality: Key Elements That Create An Environment For Audit Quality, New York, www.iaasb.org
20. Imani-Barandagh, M., Mehrani, K. and Hojjat-Shamami, R. (2016). Determining Factors of Audit Quality in Perspective of Iranian Certified Public Accountants. Accounting Knowledge, 25(7), pp. 167-189. (In Persian). https://dx.doi.org/10.22103/jak.2016.1449
21. Jung, S.J., Kim, B.J. and Chung, J.R. (2016). The Association Between Abnormal Audit Fees and Audit Quality After IFRS Adoption: Evidence From Korea. International Journal of Accounting and Information Management, 24(3), pp. 252-271. https://doi.org/10.1108/IJAIM-07-2015-0044
22. Karami, A., Gholami-Jamkarani, R., Porian, T. and Hajiha, Z. (2019). The Relationship Between Audit Quality And Corporate Transparency In Tehran Stock Exchange. Management Auditing and Accounting Science, 31(8), pp. 45-68. (In Persian). https://jmaak.srbiau.ac.ir/article_14735.html
23. Kilgore, A., Radich, R. and Harrison, G. (2011). The Relative Importance of Audit Quality Attributes. Australian Accounting Review, 21(3), pp. 253–26. https://doi.org/10.1111/j.1835-2561.2011.00141.x
24. Knechel, W.R., Krishnan, G.V., Pevzner, M., Shefchik, L.B. and Velury, U. (2012). Audit quality: Insights From The Academic Literature. Auditing: A Journal of Practice & Theory, 32(1), pp. 385–421. http://dx.doi.org/10.2139/ssrn.2040754
25. Kuang, H., Li, H., Sherwood, M. G., and Whited, R. L. (2020). Mandatory Audit Partner Rotations and Audit Quality in The United States. Auditing: A Journal of Practice & Theory, 39(3), pp. 161–184. https://doi.org/10.2308/ajpt-18-152
26. Martínez-Noya, A. and García-Canal, E. (2011). Technological Capabilities and The Decision to Outsource/Outsource Offshore R&D Services. International Business Review, 20(3), pp. 264-277. https://doi.org/10.1016/j.ibusrev.2011.01.008
27. Martin, R.D. (2013). Audit Quality Indicators: Audit Practice Meets Audit Research. Current Issues in Auditing, 7(2), pp. 17-23. https://doi.org/10.2308/ciia-50581
28. Mashayekhi, B., Mehrani, K., Rahmani, A. and Madahi, A. (2013). Development of the Audit Quality Model. Securities Exchange, 23(6), pp. 103-137. (In Persian). https://journal.seo.ir/article_11007.html?lang=en
29. MohammadRezaei, F.O. and Faraji, O. (2019). The Dilemma of Audit Quality Measuring in Archival Studies: Critiques and Suggestions for Iran’s Research Setting. Accounting and Auditing Review, 26(1), pp. 87-122. (In Persian). https://acctgrev.ut.ac.ir/article_68963.html
30. Mohsenin, SH. And Esfidani, M.R. (2013). Structural Equation Modeling with LISREL Application. Mehrban Book Institute, First Edition.Tehran, Iran. (In Persian).
31. Mojtahed-Zadeh, V. and Aghaei, P. (2004). The Factors Affecting Audit Quality From the Perspective of Independent Auditors and Users. Accounting and Auditing Review, 38(11), pp.53-76. (In Persian). https://acctgrev.ut.ac.ir/article_10483.html
32. Myers, J. E., Sweeney, T.J., and Witmer, M. (2005). A Holistic Model of Wellness. Retrieved 2015 from. http://www. mindgarden. com/products/wells
33. Nikbakht, M.R. and Mahmidi-Khoshro, O. (2017). Investigation on the Factors Affecting the Audit Quality in Iran According to the Indicators of the Public Company Accounting Oversight Board. Accounting and Auditing Review, 24(3), pp. 441-462. (In Persian). https://journals.ut.ac.ir/article_64306.html
34. Royaee, R., Talebniya, G.A., Hasas-Yeganeh, Y. and Jalili, S. (2015). Relationship Between Personal Moral Philosophy and Demographic Characteristics With Audit Quality Reduction Behaviors. Management Accounting, 6(1), pp. 15-26. (In Persian). https://jma.srbiau.ac.ir/article_2671.html?lang=fa
35. Setayesh, M.H., Kazem-Nejad, M., Rezaei, Gh.R. and Dehghani. (2016). The Usefulness of Feature Selection in Auditors Opinion Type Prediction. Accounting and Auditing Review, 23(3), pp. 373-392. (In Persian). https://acctgrev.ut.ac.ir/article_59781.html
36. Taghavi-Fard, M.T., Nemat, M. and Saniei-Monfared, M.A. (2011). The Prediction of Customer Repurchasing Behavior (Case: An Internet Service Provider). Business Management, 10(3), pp. 55-74. (In Persian). https://jibm.ut.ac.ir/article_28559.html
37. Warming-Rasmussen, B. and Jensen, L. (1998). Quality Dimensions in External Audit Services – an External User Perspective, The European Accounting Review, 7(1), pp. 65–82. https://doi.org/10.1080/096381898336583
38. Wu, C. H. and Fang, W. C. (2011). Combining the Fuzzy Analytic Hierarchy Process and the Fuzzy Delphi Method for Developing Critical Competences of Electronic Commerce Professional Managers; Qual Quant, 45(4), pp. 751–768. https://doi.org/10.1007/s11135-010-9425-6