The Relationship Between the Weakness of Internal Controls and Fraudulent Financial Reporting with an Emphasis on the Adjustment Role of External Audit Quality

Document Type : Original Article

Authors

• Marjan Samaie
• Yunes Badavar Nahandi

Tabriz Islamic Azad university

10.22067/ijaaf.v4i1.84426

Abstract

Fraud in financial accounting has grown significantly in recent years. With the financial crisis emergence in recent years, fraud in financial reporting has been entered in politics. Today, legislator assemblies, accounting, and management profession have paid special attention to financial reporting due to fraud and existing ways to prevent fraudulent behavior. Therefore, in this research, we investigate the relationship between the weakness of internal controls and fraudulent financial reporting with an emphasis on the adjustment role of external audit quality. This research was conducted during 2012-2017 years for active companies operating in Tehran stock Exchange by selecting 114 companies as a statistical sample and using logistic regression tests in EViews statistical software. The results showed that, contrary to society's perception, there is no statistically significant relationship between the weakness of internal controls and fraudulent financial reporting. The results also showed that external audit quality did not have a statistically significant effect on the relationship between the weakness of internal control and fraudulent financial reporting.
 

Keywords

• Fraudulent Financial reporting
• weakness of internal controls
• external audit quality

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