Audit Quality
Alireza Javadipour; jafar Babajani; Ghasem Blue; Vajhollah Ghorbanizadeh
Abstract
Considering the goals of forming the audit committee and its extensive duties, evaluating the performance of the audit committee in order to identify its strengths and weaknesses is very important. The present study presents a model for evaluating the performance of the audit committee and a practical ...
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Considering the goals of forming the audit committee and its extensive duties, evaluating the performance of the audit committee in order to identify its strengths and weaknesses is very important. The present study presents a model for evaluating the performance of the audit committee and a practical model for the use of the activities of the audit committee by the beneficiaries. The model obtained in the current research includes 3 parts of evaluating the individual characteristics of the members of the audit committee, evaluating the work processes and reporting of the audit committee, and evaluating its duties and responsibilities, and the final model includes 3 dimensions, 13 components, and 78 indicators. The results of the research showed that the working and reporting processes of the audit committee have the most weight in evaluating the performance of the audit committee, and the evaluation of the audit committee meetings as the focus of the audit committee's activities is the most important among the performance evaluation components.ObjectiveThe optimal performance of the audit committee is an important variable in improving the processes and structure of corporate governance as well as financial reports. The duties of audit committees around the world are in sync with developments in the economic environment, and in Iran, according to the approved charter of the audit committee, the purpose of forming an audit committee in companies is to help fulfill the supervisory responsibility of the board of directors and to improve it in order to obtain assurance of reasonable quality of financial reporting, effectiveness of the internal audit process, ensuring the independence of the independent auditor and its effectiveness, adapting the company's activities to the laws, and ensuring the effectiveness of the activities of the corporate governance system, its committees, and other components. Considering the goals of forming the audit committee and its extensive duties, evaluating the performance of the audit committee in order to identify its strengths and weaknesses is very important. Due to the lack of comprehensive research in the country to provide a model to evaluate the performance of the audit committee, the present research has addressed this issue and a practical model for the use of the activities of the audit committee has been presented.MethodThe research method used in the first stage of the study involved extracting the dimensions, components, and performance evaluation indicators of the audit committee from the theoretical sources of the research. Then, the Fuzzy Delphi method was used to screen the indicators, and the Best-Worst Method (BWM) multi-criteria decision-making method was used to weigh each dimension, component, and index. Finally, to determine the gap between the existing situation in the field of audit committee performance evaluation and the model obtained in the current research, the Fuzzy Gap method has been used.FindingsBy studying the theoretical sources of the research, 96 indicators were determined to evaluate the performance of the audit committee, which were classified into 3 dimensions and 15 components using theoretical foundations. In the next step, to check the indicators, interviews were first conducted with 10 experts. In the interviews conducted regarding 6 indicators, revisions, and content adjustments were made to adapt to the current conditions of the country's economic environment. One index was also removed due to the lack of a legal structure for the index in Iran. In the next step, 95 finalized indicators were presented to the research experts for screening, and the responses given by the research experts were analyzed using the Fuzzy Delphi method. By calculating the fuzzy average of the numbers and then de-fuzzifying them, indicators with a de-fuzzified number less than 0.7 were removed, and 78 indicators were approved by the research experts. The model obtained in the current research includes three parts: evaluating the individual characteristics of the members of the audit committee, evaluating the work processes and reporting of the audit committee, and evaluating its duties and responsibilities. The final model includes 3 dimensions, 13 components, and 78 indicators.4- ConclusionAccording to the findings of the research, the important components in evaluating the performance of the audit committee are the audit committee meetings, the audit committee resources, communication with the board of directors, the audit committee charter, and monitoring of financial reporting. The results of the research showed that the working and reporting processes of the audit committee carry the most weight in the evaluation of the audit committee's performance, with a weight of about 66%, and the evaluation of the audit committee meetings as the focus of the audit committee's activities is the most important among the evaluation components. Also, proper communication with the board of directors, provision of sufficient resources for the activities of the audit committee, the existence of an approved charter of the audit committee, and monitoring of internal controls and financial reporting are important areas for evaluating the performance of the audit committee. The results of the research also indicated the existence of a significant gap between the current status of the audit committee's performance evaluation and the model obtained in the research. In this regard, it is suggested that the legislator (Securities and Exchange Organization) obliges the listed companies to evaluate the performance of the audit committee under their supervision. Furthermore, it is recommended to use the model presented in the current research, considering the importance of dimensions and components. Additionally, the board of directors of the companies can improve the performance of these committees by taking into account the important components of the audit committee's performance, by holding the audit committees under their supervision accountable in these areas, and also making a reasonable and logical assessment of their performance.Enhancing KnowledgeThis research has presented a practical model to evaluate the performance of the audit committee according to the characteristics of Iran's economic environment, which can serve as the basis for analyzing the performance of the audit committee based on its different functional dimensions.
Rafik Baghoomian; Erfan Mohammadi
Abstract
This paper is aimed to review the effects of financial professional expertise of the auditIn this study, we investigated the effect of audit committee members’ financial expertise on the relationship between the environmental risks of the company (including financial risk, operational risk and ...
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This paper is aimed to review the effects of financial professional expertise of the auditIn this study, we investigated the effect of audit committee members’ financial expertise on the relationship between the environmental risks of the company (including financial risk, operational risk and business risk) and the audit fee of the company. Thus, after explaining the theoretical foundations and implementation of hypotheses of the research, we selected 101 companies listed on the Tehran Stock Exchange TSE) through screening for a period of 7 years (2012-2018). We extracted required data, and then examined the classical assumptions of linear regression. Finally, we tested the implemented hypotheses by using multivariate linear regression.Findings showed that audit committee members’ financial expertise has a negative and significant relationship with audit fee and environmental risks of the company however; such a relationship does not weaken the severity of the direct relationship between environmental risks and the audit fee of the company.
Farshid Kheirollahi; Farzad Eivani; Ehsan Mohebi
Abstract
Issues and problems associated with financial statements have raised ambiguities about the role and responsibilities of the board of directors as well as the audit committee in financial reporting. Accounting restatements indicates that the financial statements of the past periods are unlikely to be ...
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Issues and problems associated with financial statements have raised ambiguities about the role and responsibilities of the board of directors as well as the audit committee in financial reporting. Accounting restatements indicates that the financial statements of the past periods are unlikely to be presented in accordance with the generally accepted accounting principles. In addition, the Accounting Restatements may indicate weakness in the firm's internal control system. An efficient director labor market wills likely reward directors who have a reputation for effectiveness with additional board positions and associated benefits, and penalize the poor performers by loss of their positions and benefits. In the present study, the consequences of financial statements as a reporting failure for non-executive directors with an emphasis on the audit committee are examined. For this purpose, 43 listed firms were selected as the main sample and 43 listed firms as the control group during the years 2012 to 2016 from Tehran Stock Exchange. According to the results of the study, the financial restatements have not led to the imposition of labor market fines for outside director
ameneh bazrafshan
Abstract
The purpose of this study is to examine the impact of Audit Committee Quality (ACQ) on achieving Internal Control over Financial Reporting (ICOFR) in short run. So, the current paper investigates the impact of ACQ on Financial Reporting Quality (FRQ) including Reliability, Relevance and Timelines of ...
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The purpose of this study is to examine the impact of Audit Committee Quality (ACQ) on achieving Internal Control over Financial Reporting (ICOFR) in short run. So, the current paper investigates the impact of ACQ on Financial Reporting Quality (FRQ) including Reliability, Relevance and Timelines of financial reporting That is Information Asymmetry (IA) as the final goal of financial reporting. Regarding the latent of ACQ and FRQ, this paper use structural modeling with OLS approach by Smart-PLS software. Findings indicate that ACQ reduces IA. However, there is no relationship between ACQ and FRQ. It was also revealed that FRQ reduces IA.
Hossien Fakhari; Javad Mohammadi; Mohsen Hasannataj Kordi
Abstract
The novelty and mandatory rules about establishing of the auditcommittee in Iranian listed companies as one of the important part ofcorporate governance are controversial subject. It has been importantespecially when the real earnings management is involved. It is due to thepossibility of the detection ...
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The novelty and mandatory rules about establishing of the auditcommittee in Iranian listed companies as one of the important part ofcorporate governance are controversial subject. It has been importantespecially when the real earnings management is involved. It is due to thepossibility of the detection of real earning management that is low incomparison with accrual earning management. In companies this researchintend to investigate about audit committee characteristic and real earningmanagement in Iranian listed companies. So we gather data about 112 listedcompanies of TSE during 1392 year and analysis them with cross-sectionalregression.In general our findings show that there is a significant relationshipbetween audit committee characteristics and real earnings management. Alsoour findings help to TSE policy maker for reporting and enforcement ofaudit committee charter. It indicates also that there is a vital need forapplying of corporate governance rules in Iranian listed companies
Seyed Hossein Sajadi; Mohsen Dastgir; Mojtaba Afshar Jahanshahi
Volume 4, Issue 15 , October 2006, , Pages 65-86
Abstract
The Purpose of this research, is the understanding the effect of Audit Committee existence and finally identifying the necessity of creating i t in our Country.
The results show that the existence of Audit committee causes that improve the quality of financial reporting, quality of internal Controls, ...
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The Purpose of this research, is the understanding the effect of Audit Committee existence and finally identifying the necessity of creating i t in our Country.
The results show that the existence of Audit committee causes that improve the quality of financial reporting, quality of internal Controls, external Auditor Performance and internal Auditor Performance and decreases the Management fraud.
