THE IRANIAN ACCOUNTING AND AUDITING REVIEW
Year:2020 | Volume:27 | Issue:2|Papers Count:7

Objective: The purpose of this study is to investigate the relationship between auditors' individual resilience and reducing audit quality practices with respect to the stress pattern in the audit profession. Methods: The study is an applied-type survey, that in order to measure the resilience we used Connor and Davidson questionnaire, for reduction practices in audit quality the Otley and Pierce questionnaire, for burnout the Maslach questionnaire, and stress arousal of Smith et al. questionnaire. Relevant data were collected from 201 completed questionnaires among the Iranian Society of Certified Public Accountants and Auditors in Audit Organization in 2018 and structural equation method was used to analyze the findings. Results: The results of the study show that there is a negative relationship between resilience and stress arousal, burnout and audit quality reduction methods. Since resilience is considered as an attribute for successful and positive compliance with stress and stress factors, the results suggest that if the auditor’ s resilience is low in work, the stress is increased by workload. There is also a positive relationship between role conflict with stress arousal and role overload with stress arousal but no significant relationship was found between role ambiguity and stress arousal. There is also a negative relationship between resilience and reduced audit quality practices. If the auditor has resilience and this characteristic is further enhanced, he or she will adhere to the standard time budget for audits, and will perform all necessary procedures in accordance with auditing standards and the audit plan, and thus conduct audits of behaviors that lead to improve the quality of auditing. When the auditor has a large number of tasks and on the other hand does not have the time needed to perform the assigned tasks, his or her stress increases. The degree of conflict between the role and occupation of the auditors is the factor that causes the auditors' stress to be addressed in their audit process. The results also show that there is a positive relationship between burnout and reduced audit quality. Conclusion: The results show that the resilience issue in the audit profession affects the personal behavior and professional outcomes of auditors. In fact, this factor can reduce the quality of auditor work and create burnout and stress arousal in the lead. However, stress arousal and its negative results do not affect job stress. Although some studies have documented that stress arousal can affect the reduction of audit quality, other studies have documented the effect of stress arousal on reducing audit quality.

Objective: Stakeholders have a great impact on corporate behavior and performance and provide them with necessary resources for investment. Therefore, using the Structural Equation Modeling approach, this study examines the effect of the stakeholder relationship capability on corporate investment in innovative activities. Methods: This study employs meta-synthesis analysis, Delphi analysis and a researchmade questionnaire to measure stakeholder relationship capability, and four proxies of individual, technical, environmental and operational innovation to measure corporate innovation. The questionnaire is sent to 151 managers in year 2018. Finally, 102 managers answered the questionnaires. Results: Having ensured the good-fitness of the evaluation and structural models, the results show that the stakeholder relationship capability improves the firm's innovation. Conclusion: Stakeholder relationship capability assist mangers in identifying stakeholders’ innovation needs and consequently, interacting with them to attract new resources and ideas, and as a result, more investment in innovative activities. These findings suggest the importance of the stakeholder relationship capability in firm's investment in innovation activities.

Objective: Complex financial reporting and low readability increases auditor efforts to manage Audit Engagement Risk. Accordingly, considering the importance of financial reporting and readability, and its understandability for stakeholders, as well as the role of auditors in attestation of financial statements, the purpose of this study is to investigate the effect of annual report readability on the audit engagement risk measures. Methods: Based on the theoretical and empirical bases of the research, the audit report lag, audit fees, going concern opinion and auditor turnover were selected as the risk criteria for the audit engagement. The data was collected from the firms listed in the Tehran Stock Exchange during the period 1391 to 1397 and the research hypotheses were tested using panel data and multiple regression and logistic regression. Results: The results of the study indicate that in companies where the readability of financial reporting is lower, more audit fees, longer audit report lag and more likelihood of going concern opinion have received and more audits are more likely to change than the other companies. These results indicate that in firms with the less financial reporting readability, the auditors will face more audit risk and they need to work harder. Conclusion: The findings indicate that the readability of financial reporting provides information about the risk of auditing and affects the decisions of auditors. These findings are suitable for Linguistic development, improving the readability and disclosure in financial reporting for auditors, legislators and auditors for auditing and accounting standards setting. It also highlights the importance of qualitative information characteristics on the effectiveness of investors' analysis and decisions.

Objective: The value of the company is the result of various management actions and decisions. At the same time, it is an indicator of how the market perceives the company that is derived from the extent and manner of disclosing information. This study seeks to provide a non-linear model of the relationship between voluntary disclosure and firm value in the presence of factors that are expected to have a similar capability to reduce information asymmetry or to influence the value relevance of voluntary disclosure. Methods: Accounting conservatism, product market competition, cash holding levels, corporate governance and macroeconomic instability were considered according to the theoretical and empirical literature and using the panel smooth transition regression model (PSTR), the existence of a nonlinear relationship in the presence of each of these variables was investigated. Results: The results of analysis of 124 companies listed in the Tehran Stock Exchange during 2013 to 2016 showed that accounting conservatism, cash holding level and macroeconomic instability variables are able to establish a nonlinear relationship between voluntary disclosure and firm value but the presence of cash holding level variable has more power in explaining the optimal relationship. Also, the effect of voluntary disclosure of information at low cash levels is negative, but for values greater than 0. 152, this effect is reversed and has a positive effect on firm value. Conclusion: According to the theory of free cash flow and the agency theory, it is argued that the goal of the manager is not to increase the wealth of shareholders, and by holding free cash, he may take steps for personal gain. Hence, high liquidity is associated with high agency costs. But when the quality of disclosure is high, free cash flows have a stronger impact on firm value. In other words, improving the quality of disclosure improves the use of cash and investment in projects with a positive net present value, reduces the misuse of cash, and increases the firm value. Also, one of the ways to increase the firm value by voluntary disclosure is to reduce the cost of transactions by reducing the cost of financing. Given that most sample companies were in the second regime, the importance of voluntary disclosure in promoting the value of the company would be more important.

Objective: One important purpose of financial reporting is to provide useful information for decision making. Users of accounting information make their necessary decisions based on the information reported in the financial statements. Given the crucial role of independent auditors in the accreditation of financial statements and accounting information released by corporations, auditors play as an external organizational mechanism for controlling managers. The formation of the Society of Certified Public Accountants in Iran in 2001 has led to a rapid growth in the number of private audit firms and increased competition in the Iranian audit market, followed by a change of auditor and selection of a new auditor. Choosing an independent auditor is the most important decision that shareholders make to increase the credibility of their financial statements. In this study, the pattern of selecting an auditor in Iran is studied and it is tried to determine a complete and comprehensive pattern of selection from the viewpoint of the factors involved in this issue, including auditing profession first, then audit firms and finally the owners. Methods: The research approach is exploratory. According to the data type, qualitative research method was used. This research is a type of developmental research. According to the qualitative research method, requirement data was collected through grounded theory and interview. Open coding, axial coding and selective coding were done as well. Finally, research model designed based on the theoretical framework. Results: In this study, based on a systematic approach to fundamental theory, the pattern of external auditor selection with its explanatory components is explained. These components include causal conditions, context, confounding factors, strategies and consequences of selecting an external auditor. Conclusion: In designing the auditor selection pattern, the Corporate's motivation for selecting the auditor has been identified as causal in the context of macroeconomic conditions and the general state of the capital market. Auditor selection strategies also include different forms and methods, including the legal form and the actual form. The most important factors that interfere with these strategies are the influential characteristics of the audit firm, the requirements of the rules, the communication and understanding between the employer and the auditor, and the audit fee. The most important strategies for improving auditor selection include: increasing the transparency of business activities, increasing the effectiveness of the audit committee, creating more appropriate criteria for selection, overseeing the selection of an auditor, selecting an independent auditor, enhancing academic research, and promoting a public culture that can have consequences at company level, capital market and macro level.

Objective: The widespread competition in market, has forced companies to adopt strategies to deal with this competition. This study aims to investigate the effect of competitive strategies of product differentiation and cost management on growth of companies' competitive power and to scrutinize pre-sanction and sanction periods in regards with this effect. Methods: The sample consisted of 137 listed companies in the Tehran Stock Exchange during the years 2004 to 2015. Then research hypotheses analysed for three time periods namely pre-sanctions period (2004-2009), the sanctions period (2010-2015) and the whole period of 2004-2015 seprately. Results: The results showed that non of competitive strategies product differentiation and cost management had significant impact on the companies competitive power growth in the pre-sanctions period. The use of cost management and product differentiation strategies has led to increas and decrease in competitive power growth of companies respectively during the sanctions period. In addition, during this period, the intensity of the effect of product differentiation strategy on decreasing the competitive power growth has been more than the intensity of the effect of cost management strategy on increasing the competitive power growth. So, the effect of competitive strategies including product differentiation and cost management on growth of companies' competitive power in pre-sanction and sanction periods are different. The results also indicated that the use of cost management strategy during the period form 2004 to 2015 has increased the competitive power growth of companies but the product differentiation strategy had no significant effect. Conclusion: The growth of Competitive power varies according to the type of competitive strategy which is pursued by companies. An increase in the competitiveness power of companies is seen due to the use of cost management strategy; however the use of product differentiation strategy has not been very successful. The results indicate that in order to take advantage of opportunities and to overcome the threats, managers should consider a strategic management approach based on understanding the internal and external environment of the organization in developing competitive strategies of companies. Also, by carefully monitoring their operating costs and not compromising product quality, they have to utilize a cost leadership strategy. In addition, in order for a product differentiation strategy to succeed in creating value for customers and for the company to achieve competitive advantage, the values created in the company's products or services need to be higher than the customer's costs so that customers are willing to pay a higher price.

Objective: Costing systems are among the foundations that have gained prominence in the new world of cost management. The purpose of this study is, by innovation and contingent theories, to investigate 1. What constructs should be selected for successful implementation of costing systems? 2. Why there is a gap between theory and practice in these systems? In this regard, the influence of organizational, technological, environmental, costs and other factors relating to the PFABC system, as the most contemporary ABC system, were investigated. Methods: This research adopts the quantitative approach and survey method. First, by library research approach and utilizing the literature of innovation and expectancy theories, a conceptual model was developed. Second, by adopting content analysis, the major imputing constructs of the framework were identified and tested. A five scale Likert type of questionnaire was employed to collect necessary data. The validity and reliability of the questionnaire was tested by the face validity and Crohnbach's alpha, respectively. The statistical population consists of all the Tehran Stock Exchange (TSE) companies. In 2018, 450 questionnaires were sent to (TSE) corporate executives and 262 usable responses were collected. Structural Modeling equations, SPSS and SMARTPLS softwares were used to analyze the results. Results: By introducing a comprehensive framework, the results showed that all constructs relating to organizational (management's support, employee's support, education, type of the industry, organization's size, and tendency of management towards risk), technology, (product variety, product complexity, and volume of the overhead) environment (type of the organization's strategy, competition, role of the government, and culture) cost factors (implementation costs and maintenance costs of the system), and other construct (cost saving, integration of the system, and timing of the system implementation) had a positive and significant effect on the implementation of the PFABC costing system. The environmental factors with the coefficient of (0. 997) had the greatest impact, followed by cost factors (0. 996), technology factors (0. 993) and organizational factors (0. 981) respectively. However, there was no meaningful relationship between the constructs related of other factors (desire to save, system integration and time of system implementation) and implementation of the PFABC costing system. Conclusion: The most important constructs that influence the successful implementation of a costing system are relating to organizational, technological, environmental and cost factors. These are also the major factors responsible for the existence of a gap between theory and practice. The application of ABC, TDABC, and PFABC among TSE firms, was 6. 1%, 0. 04% and 0% accordingly, hence, there is a huge gap between theory and practice.