Internal Control Quality Assessment based on the Characteristics of the Entity and Auditor and their Expected Goals in the Firm's Listed in Tehran Stock Exchange
محورهای موضوعی : Financial MathematicsSaeed Alipour 1 , Asgar Pakmaram 2 , Rasool Abdi 3 , Jamal Bahri sales 4
1 - Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran. Postcode134/55518
2 - Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran. Postcode134/55518
3 - Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran. Postcode134/55518
4 - Department of Accounting, Urmia Branch, Islamic Azad University, Urmia, Iran. Postcode 63896-57169
کلید واژه: Internal Controls Quality, Internal control weaknesses, Characteristics of Auditor, Ogneva Model, Characteristics of the Econom-ic Unit,
چکیده مقاله :
According to the domestic studies conducted on in the field of internal controls, the gap of providing models for identifying weak internal controls is felt completely. The present study is aimed at providing a model for assessing the quality of internal controls based on the characteristics of the economic unit, the characteristics of auditor as well as their expected goals in the Firm's listed in Tehran Stock Exchange. This model is designed according to quantitative criteria. To achieve the research’s goal, 86 Firm's from all Firm's accepted in Tehran Stock Exchange for the period 2012-2017 were selected and the research hypothesis was tested using the combined data approach. Given the research hypothesis that points out that the internal assessment model based on the characteristics of the economic units, the characteristics of auditor and their expected objectives may more accurately assess the quality of the internal controls, according to the significance level of less than 0.05, the independent variables indicate a significant relationship between the internal controls assessment model based on the characteristics of the economic units, the characteristics of auditor and their expected objectives as well as the weaknesses of the internal control of the Firm. Furthermore, the estimated coefficient of the control variables of the research indicates a significant relationship between these variables and the weaknesses of the internal controls.
[1] Liu, C., Lin, B., Shu, W., Employee quality, monitoring environment and internal control, China Journal of Accounting Research, 2017, 10(1), P. 51-70. Doi: 10.1016/j.cjar.2016.12.002
[2] Kaviani, M., A Review of the Challenges in the Reporting of Internal Controls in Iran, Auditors' Audit, 2015, 78, P. 42-50. (In Persian)
[3] Ogneva, M., Subramanyam, K. R., Raghunandan, K., Internal control weakness and cost of equity: Evidence from SOX Section 404 disclosures, The Accounting Review, 2007, 82(5), P.1255-1297. Doi: 10.2139/ssrn.766104
[4] Ashbaugh-Skaife, H., Collins, D. W., Kinney, W. R., The discovery and reporting of internal control deficiencies prior to SOX-mandated audit, Journal of Accounting and Economics, 2007, 44(1), P. 166-192. Doi: 10.1016/j.jacceco.2006.10.001
[5] Ge, W., McVay, S., The disclosure of material weaknesses in internal control after the Sarbanes-Oxley Act, Accounting Horizons, 2005, 19(3), P. 137-158. Doi: 10.2308/acch.2005.19.3.137
[6] BaniMahd, B., Nejati, A., The relationship between organizational culture and auditors' commitment, Financial Accounting and Audit Research, 2016, 8 (30), P. 138-119. (In Persian)
[7] Vaez, S.A., Ahmadi, M.R., Rashidi Baghi, M., Effect of audit quality on corporate audit fees, Empirical Research of Financial Accounting, 2014, 1(10), P. 110-87. (In Persian)
[8] Yazdi, H., Mohammadian, M., Effect of Profitability Indices on the Capital Structure of Listed Firms in Tehran Stock Exchange, Advances in mathematical finance & applications, 2017, 2(3), P. 1-11, (in Persian). Doi:10.22034/amfa.2017.533085
[9] Kiwi, R., Campenhead, L.V., Methodology in the Social Sciences, Translation by Abdolhossein Nik Gohar, Tehran: T. Sixth Edition, 2008 (In Persian)
[10] Coleman, S; Watson, H., An Introduction to Humanities, Translated by Mohsen Solati, Tehran: Scientific. Second edition, 2002, (In Persian)
[11] Maham K; Tak rousta, M., Knowing., The Obstacles to Assessing Internal Controls in Independent Audit, Audit Knowledge, 2012, 12 (46), P. 62-79. (In Persia)
[12] Fandersky, A., Safari Grayli, M., The effectiveness of internal controls and the risk of falling stock prices, Financial Accounting and Audit Research, 2018, 10 (38), P. 186-169. (In Persian)
[13] Hajih, Z., Oradi, J., Saleh Abadi, M., Weakness in internal control and delayed audit report, Financial Accounting Phrases, 2017, 9 (33), P. 78-96. (In Persian)
[14] Mashhadi, S., Nazari, J., Ehtesham Ratsi, R., Influence of the Information Technology Control and Evaluation Framework on the quality of internal controls and the quality of financial reporting Firm's in the pharmaceutical industry accepted on the stock exchange, Quarterly Journal of Development and Development. 2017, 28, P. 71-81. (In Persian)
[15] Cheraghizadeh, M., Moghadam, A., The Effect of Internal Controls on Financial Reporting Quality in Firm's Accepted in the Stock Exchange Using the Francis et al. Model, Fourth National Conference on Accounting, Financial Management and Investment, Azadshahr, Scientific Association Professionals of Golestan Managers and Accountants, Islamic Azad University, Azadshahr Branch.2015, (In Persian)
[16] Bryan, D. B., Organized labor, audit quality, and internal control, Advances in Accounting, 2017, 36, P. 11-26. Doi: 10.1016/j.adiac.2016.09.005
[17] Chen, Y., Eshleman, J. D., Soileau, J. S., Board gender diversity and internal control weaknesses, Advances in Accounting, 2016, 33, P. 11-19. Doi: /10.1016/j.adiac.2016.04.005
[18] Lenard, M. J., Petruska, K. A., Alam, P., & Yu, B., Internal control weaknesses and evidence of real activities manipulation, Advances in Accounting, 2016, 33, P. 47-58. Doi: 10.1016/j.adiac.2016.04.008
[19] Balouei, E., Anvary Rostamy, A.R., Sadeghi Sharifc, J., Saeedid,A., The Impacts of Financial Structure on Financial Performance of Banks listed in Tehran Stock Exchange: An Empirical Application, Advances in mathematical finance & applications, 2018, 3(3), P. 11-26, (in Persian). Doi: 10.22034/amfa.2018. 544946
[20] Abbaszadeh, M, R., Mohammadi, J., Mohammadi, K., Necessity of Internal Controls in the Public Sector, Journal of Financial Research, 2011, 13 (56), P. 7-1. (In Persian)
[21] Ji, X. D., Lu, W., Qu, W., Voluntary Disclosure of Internal Control Weakness and Earnings Quality: Evidence from China, The International Journal of Accounting, 2017, 52(1), P. 27-44.
[22] Jokar, H., Shamsaddini, K., Daneshi, V., Investigating the Effect of Investors' Behaviour and Management on the Stock Returns: Evidence from Iran, Advances in Mathematical Finance and Applications, 2018, 3(3), P. 41-52. (In Persian)
[23] Izadikhah, M., Saen, R.F., Roostaee, R., How to assess sustainability of suppliers in the presence of volume discount and negative data in data envelopment analysis? Annals of Operations Research, 2018, 269, P.241–267, Doi: 10.1007/s10479-018-2790-6
[24] Fakhari, H., Kabiri M, T., The effect of moderating the audit report on the relationship between the disclosure of weaknesses in internal control and information asymmetry, Empirical Accounting Research: Spring, 2018, 7(27), P. 172-147. (In Persian)
[25] Moshirzadeh H., The challenge of deploying the internal controls system in Iran, The Official Accountant, 2012, 20, P. 18-23. (In Persian)
[26] Piri, P., Sheikh Mohammadi, A., Javadi, N., Investigate the relationship between the size of the audit firm, the number of clients of the audit firm with audit quality, Audit Knowledge,2014, 13 (51), P. 26-1. (In Persian)
[27] Tavangar Hamzeh Kalayi A; Ascahi Aal, M., The relationship between CEO power, audit committee characteristics and internal control quality, Financial Accounting and Audit Research, 2018, 10 (38), P. 207-187. (In Persian)
[28] Jamei, R; Rastmian, A., Effect of Financial Audit Committee Members' Profit on Predictable Profitability Characteristics, Financial Accounting and Audit Research.2016, 8 (29), P. 17-1. (In Persian)
[29] Izadikhah, M., Improving the Banks Shareholder Long Term Values by Using Data Envelopment Analysis Model, Advances in Mathematical Finance and Applications, 2018, 3(2), P. 27-41. Doi: 10.22034/amfa.2018.540829
[30] Khlif, H., Samaha, K., Soliman, M.T., Internal Control Quality, Disclosure and Cost of Equity Capital: The Case of an Unregulated Market, 2017. Doi:10.2139/ssrn.3059702
[31] Yu-Chien K., Hamido F., Tianrui L., An evidential analysis of Altman Z-score for financial predictions: Case study on solar energy companies, Applied Soft Computing, 2017, 52, P. 748-759. Doi: 10.1016/j.asoc.2016.09.050
