Document Type : Research Paper
Authors
1
Assistant Professor of Accounting, Faculty of Finance, University of Kharazmi, Tehran, Iran.
2
M.A. of accounting, Faculty of Finance, University of Kharazmi, Tehran, Iran.
3
Ph.D. Candidate of Accounting, Faculty of Management and Accounting, University of Tehran, Tehran, Iran.
4
M.A. in financial management, Bonab Branch, Islamic Azad University, East Azerbaijan, Iran.
10.22103/jak.2024.23428.4054
Abstract
Objective: Considering the concern of the ‘Committee for the Admission and Supervision of Trusted Audit Firms of the Securities and Exchange Organization’ regarding the transfer of audit qualification paragraphs (AQPs) to ‘emphasis of matter paragraphs’ (EMPs), the aim of this study is to examine this issue in the Iranian auditing market.
Method: The research sample includes 1,800 observations from 2013 to 2022. To predict the relationship between variables, ‘communication theory’ suggests that changes in the structure of the audit report improve its quality and readability, and EMPs should not be related to AQPs. However, ‘motivational reasoning theory’ raises the possibility that auditors may opportunistically transfer AQPs of EMPs; therefore, there is a negative relationship between these two types of audit report paragraphs.
Results: The findings of the present research indicate that there is no significant relationship between EMPs and the audit report (the number of AQPs in the auditor’s report, and the type of the auditor’s opinion). On the other hand, the variable of issuing a favorable audit report for the client also has a negative relationship with all three variables related to EMPs.
Conclusion: The results of the present study, contrary to motivational reasoning theory, fail to confirm a systematic and opportunistic relationship between EMPs and the audit report, which is the concern of the aforementioned committee. The findings show that only about 4% of AQPs have been transferred to EMPs.
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