Evaluation of The Emergence Key Drivers of Creative Accounting in the Future of The Financial Reporting Legitimacy

Document Type : Research Paper

Authors

1 PhD Student in Accounting, Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran

2 Department of Accounting, Faculty of Economics and Accounting, Islamic Azad University, South Tehran Branch, Tehran, Iran

3 Department of accounting. South Tehran Branch, Islamic Azad University.

10.22051/jera.2024.45015.3168

Abstract

The methodology of the present study is a combination in terms of data collection and inductive/deductive in terms of research philosophy. Also, in terms of the nature of the goal, this study is considered exploratory and in terms of the result, development. The participants in the qualitative section were 12 academic experts and 25 financial managers of Tehran Stock Exchange companies. In this study, a series of matrix processes are used in the quantitative part so that it is possible to determine possible scenarios regarding creative accounting, and then the most effective quarter of the matrix on the legitimacy of financial reporting of companies in the future is investigated. The research findings in the qualitative section are based on 12 interviews with experts, a framework suitable for 3 overarching themes; It shows 6 organizing themes and 26 basic themes. On the other hand, in the quantitative part, 4 quadrants of the matrix were identified based on the two axes of governance drives and internal control drives. It was also determined that the most important scenario related to the key drivers of the emergence of creative accounting that can affect the ethical legitimacy of financial reporting is the scenario of the second quadrant of the Tyrannicide Matrix, that is, the weakness of structural centralization in the effectiveness of internal control. The results of this study show that the level of internal control is the first front of dealing with the financial performance of companies, which can strengthen the possibility of normative development of adherence to the rights of stakeholders by filtering any deviations from operational realities and financial reporting procedures. But with managers exerting influence on internal auditors through influence and command relationships, the independence of this unit decreases and this important unit of internal control processes loses its effectiveness.

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History

  • Receive Date: 18 September 2023
  • Revise Date: 06 December 2023
  • Accept Date: 20 January 2024

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