Modeling Financial Reporting Bias

Document Type : Research Paper

Authors

1 Tarbiat Modares University

2 Accounting, Management, and Economics, Tarbiat Modares University

3 MA in Accounting Tarbiat Modares University

Abstract

Introduction:
The increasing in number and variety of fraud and error in the financial reporting system is a threat to the quality of the system. The duty of the accounting profession is to prepare and provide financial information and reports to users. The presence of fraud as a financial crisis factor poses a serious threat to public confidence in financial information and financial reporting process and has costly consequences for various groups.
Research questions:
The purpose of this study is to investigate and identify the factors affecting financial reporting bias (fraud and error) and to provide a model for it. therefore, the research questions are as follows: What are the factors affecting financial reporting bias? How to prioritize identified factors over financial reporting bias? What model can be presented to explain the factors that influence financial reporting bias?
Methods:
In this study, using random sampling method and through interviews with experts such as university faculty and managers of the audit organization, as well as using Shannon entropy analysis to evaluate the information obtained from interviews, factors affecting the occurrence financial reporting errors have been investigated. Also, in the following and after distribution of questionnaires, final analysis was performed through the structural equation method and at the end, the final model of research was designed.
Finding:
In this study, by identifying a model for financial reporting bias, the components that have the most impact on the occurrence of fraud and error in financial reporting were identified. The factors such as corporate structural characteristics, legal and regulatory factors and also corporate environmental characteristics are the most effective factors for the occurrence of error in financial reports.
Discussion and Conclusion:
Based on the results of the study, it is suggested that auditors and financial managers of companies, use the proposed model presented in this research to identify as well as discover the factors that influence the occurrence of financial reporting bias (fraud and error). Auditors and corporate executives can reduce fraud and error in companies by studying these factors, and trying to eliminate them or improve control and supervision practices.
 
 

Keywords

References

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Journal of Accounting Advances
Volume 13, Issue 1 - Serial Number 81
October 2021
Pages 161-189

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History

  • Receive Date: 07 March 2021
  • Revise Date: 05 September 2021
  • Accept Date: 07 September 2021

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