مجله پیشرفت های حسابداری
سال پنجم شماره 2 (پیاپی 65، پاییز و زمستان 1392)

Recent financial scandals worldwide have triggered concerns and worries about both audit quality and dependability of financial statements. To ease these worries, supervising and policy making organizations like Securities and Exchange Organization have initiated attempts to find solutions, one of which is rendering rotation of auditing firms and audit partner mandatory. This theory, however, has its supporters and adversaries. Each of these groups proposes their own logic regarding this case. The logic of the group in favor of mandatory laws is that in case of mandatory rotation, auditors will have to work more carefully due to unfamiliarity with the new business unit; moreover, they will experience a higher degree of independence on the account of the fact that less managerial pressure would be exerted on them. Nonetheless, the logic of the opposing group is that changing the auditor will bring about a problem; the auditor will not be well acquainted with the client and the client account, a fact which will in turn result in decreased audit quality. Regarding the above mentioned points, the present research tries to study the effects of rotating audit firms and audit partners on audit quality in Iran. Furthermore, on the basis of existing theoretical principles, short or long term tenure of the audit partner has various effects on audit quality. Considering this issue, this study also examines the effect of long and short term tenure of the audit partner on audit quality. Moreover, given that mandatory rotation improves audit quality, such improvement in quality will help auditors discover and report more serious and significant mistakes and distortions in financial statements at the time of their occurrence. Therefore, this fact will bring about the possibility of great decrease in amount and number of annual adjustments in financial statements. Hence, in the present study, we have examined the relationship between rotation of audit firms or audit partners and annual adjustments. Research The present research is conducted following a quasi-experimental research design. Statistical population of this research includes the companies that are accepted in Tehran Stock Exchange from 1384 to 1388. Omissive Sampling method has been applied and 98 companies have been chosen as samples out of the statistical population. In order to analyze the hypotheses, linear regression has been used. Finally, to assess audit quality, the two criteria of discretionary accruals and annual adjustments have been utilized. Research HypothesesResearch hypotheses are as follows: Hypothesis 1: Rotation of audit firms affects audit quality Hypothesis 2: Rotation of audit partner affects audit quality Hypothesis 3: Short term tenure of audit partner affects audit quality Hypothesis 4: Long term tenure of audit partner affects audit quality Hypothesis 5: Rotation of audit firms affects annual adjustments Hypothesis 6: Rotation of audit partner affects annual adjustments Research In this research, we came to the conclusion that rotation of audit firms does not have any effects on audit quality whereas rotation of audit partner increases audit quality. Furthermore, this study clarified that during short term tenure of audit partner, audit quality remains unchanged, but if audit partner tenure becomes longer, this prolonged relationship decreases audit quality. In addition, this study indicates that mandatory rotation of audit firms does not have any effects on annual adjustments while mandatory rotation of audit partner results in reduction of annual adjustments.

Many countries accepted international financial reporting standards. The degree of acceptance differs from complete acceptance to some acceptance of standards, or for some of companies. Convergence of accounting standards is a world-wide issue. Iranian accounting standard is based mainly to IFRSs, with some differences. This study investigates the opinion of three financial statements users (financial managers, auditors, and professional investors) about the current differences of Iranian and international financial accounting standards. We limit the range of study to 16 main differences highlighted in the last paragraph of Iranian accounting standard. However, there are a lot of differences in the details of the two sets of standards that are largely related to the limitation of methods in Iranian accounting standards. For example, the LIFO is not accepted for inventory valuation. Research hypotheses We developed the following hypotheses: H1: Financial managers of listed companies have agreed with the differences of local accounting standards and IFRSs. H1: Certified public accountants (Auditors) have agreed with the differences of local accounting standards and IFRSs. H1: Professional investors have agreed with the differences of local accounting standards and IFRSs. Each of the above mentioned hypotheses tested for 16 main differences of Iranian accounting standards with IFRSs. This study is a survey research. The population consists of 20 top financial managers of listed companies in Tehran Securities and Exchange Commission, 86 Iranian certified public accountants, and 40 professional investors. The investment managers of investing companies, and their representatives, are used as a proxy for professional investors. For testing the hypotheses, we used the Binomial test, in each 16 subjects of survey, as well as in each three groups. The results show that all groups agree with the three treatments prescribed by the national accounting standards, but in 13 others there is at least one disagreeing group that in financial managers group, Iranian certified accountants (Auditors) group, and professional investors group 4,9 and 2 treatments are important, respectively. The result also indicated that financial managers are almost pleased with the current differences. But professional investors have opposed opinions, and almost are disagree with the differences. The Iranian certified accountants have a moderated opinion, but their disagreements are larger than their agreements. Conclusion and The results showed that, in the opinion of the users, due process was not effective. Therefore, it is proposed that the board consider more efficient mechanisms for due process to expand participation of interested groups. [Also, it is recommended that had priority to the IFRS, if the due processes, for an exposure draft, show neutral opinions.]?

The changing trends from traditional economy (land, labor and financial) to knowledge-intensive economy during the last two centuries, have made service based industries take the major share in the value creation process especially in developed societies. On the other hand, one of the most significant resources, which the users use to make decisions, is the group of reports called financial reports. In recent years, following the bankruptcy of some large companies in the world, researchers and financial analysts, in addition to considering the earnings quantity, note earnings quality as well. Accounting researches have demonstrated empirically that poor quality of earnings leads to an increase in cost of equity. Parallel to this debate, accounting researchers have argued that reduction in non-recognition of intellectual capital increases the gap between market and book value, and consequently, diminishes the value relevance of earnings. In the present study, the following question is raised: “Is there a significant relationship between firms’ TSE intellectual capital and their financial reporting quality?” Hence, the main objective of this study is to investigate the impact of intellectual capital on improving financial reporting quality of companies listed in Tehran Stock Exchange (TSE). Research Hypotheses: Based on the theoretical literature and the conducted studies, research hypotheses were developed as follows. The present study has one primary hypothesis and three secondary hypotheses. Main hypothesis: “There is a significant relationship between the components of intellectual capital and the financial reporting quality”. Secondary hypotheses: H1: There is a significant relationship between capital employed efficiency and the financial reporting quality. H2: There is a significant relationship between human capital efficiency and the financial reporting quality. H3: There is a significant relationship between structural capital efficiency and the financial reporting quality. The research methodology is a quantitative research that uses the scientific method and empirical evidence, and based on hypotheses and research designs is done. This category research is used when criteria for measurement data quantitative and statistical techniques are used to derive the results. In this research, data of 76 companies are analyzed for the period of 2003-2009. The related data was collected through observation of Iranian database of Tehran Stock Exchange (Tadbir Pardaz) annual data files and the accompanying notes as found on www.rdis.com. For statistical analysis and to test hypotheses, descriptive statistics (i.e., mean, maximum, minimum and standard deviation) and inferential statistics (i.e., correlation-test and enter multiple linear regression) are used. The collected data was calculated using the Excel software and was analyzed using SPSS 19. To measure intellectual capital of companies, the Pulik’s (2000) model has been used. Also, the Francis et al. (2005) and Dechow and Dichev (2002) models have been used as a proxy for financial reporting quality. The results of this research show that at a confidence level of 95%, there is a significant positive relationship between structural capital coefficient, human Capital Coefficient, and financial reporting quality. But, there is no significant relationship between capital employed efficiency and financial reporting quality. In addition, the results of research concerning control variables show that there is a negative relationship between firm size and financial reporting quality, but there is a positive relationship between debt ratio and financial reporting quality. Discussion and The goal of this research is to study the effects of intellectual capital on the financial reporting quality of listed companies in Tehran Stock Exchange. In general, based on the results of the present study and according to the positively significant effect of the components of intellectual capital as one intangible asset on the financial reporting quality, and since the main objective of financial reporting that financial reporting quality is one of its components, provide useful data to help actual and potential investors in their logical decision makings, disclosure of intellectual capital in financial statements will lead to the usefulness of decision makings for users and thus the significance of proper disclosure of intellectual capital in financial reports of firms is more evident in order to contribute to their accomplishment of goals.

Introuduction: In the discussion of auditors’ independence, two aspects are under consideration: independence in appearance and independence in fact. Independence in appearance focuses on auditors’ relationship with client management from the third parties point of view and independence in fact is related to the auditors’ state of mind in the audit process: having an unbiased mental attitude (Bartlett, 1993) or maintaining an objective and impartial mental attitude (Sridharan et al., 2002) throughout the audit from planning the audit, gathering and evaluating the evidence to issuing the audit report. Particularly, in an auditor’s conflict of interest situation, taking an unbiased viewpoint (Arnes & Loebbeck, 1997)/maintaining an independent mind, in order to make a judgment free from influences of the conflict on auditor's utility becomes more important. The present study aims at examining the effects of two personality factors (ethical reasoning and belief in a just world) on auditor's competence in maintaining an independent mind in a conflict of interests situation Hypotheses: The aim of the study is to examine the interactional effects of cognitive moral development and belief in a just world on Iranian auditor's competence to maintain independence of mind in a dispute with client's management. The primary goal of the research is to examine the effectiveness of these two factors on Iranian auditor's independence; then the research progresses to study the direction and quality of the effect. Thus research hypotheses are developed as follows: H1. Auditor's personality characteristics (ethical reasoning and belief in a just world) influence auditors accede to client's management request. H2. Auditors with high level of ethical reasoning and strong belief in a just world, accede to the client's management request less than other groups of auditors. H3. Auditors with medium level of ethical reasoning and strong belief in a just world accede to the client's management request less than auditors with medium level of ethical reasoning and weak belief in a just world. H4. Auditors with low level of ethical reasoning and weak belief in a just world, accede to the client's management request more than other groups of auditors. The data required for the research were gathered through questionnaires distributed among members of IACPA. Three hundred questionnaires were distributed in two rounds and finally 182 questionnaires were collected; thirteen of them were incomplete and could not be scored; 169 questionnaires were complete and usable for the study. The questionnaire consists of a demographic information section and two other sections for measuring research variables: section "1. Audit Style" for measuring dependent variable, section "2.A. Personality Style" for measuring independent variable the belief in a just world and section "2.B. Attitude Toward Social Problems" for measuring ethical reasoning the other independent variable. With the aim of examining the effect of two personal characteristics on Iranian auditor's independence, a two-way ANOVA method has been used to compare the mean of dependent variable between six groups of auditors. The SPSS statistical package was utilized for running the analysis. There are two categorical independent variables in the research: ethical reasoning and belief in a just world which has respectively three levels and two levels. The first hypothesis was supported suggesting that the interaction of ethical reasoning and belief in a just world influences Iranian auditors professional decision making process and hence their independence of mind. The second hypothesis was not supported by the data. Auditors at post-conventional thinking and strong belief in a just world maintain independence of mind more than auditors at pre-conventional thinking; however their competence in maintaining independence is equal with auditors at conventional thinking. Research data did not support the third hypothesis. It suggests that the belief in a just world does not influence Iranian conventional auditor's response to the pressure of conflict of interests. In the other words, conventional auditors are not influenced by their perspective to personal consequences of acts and behaviors and maintain their independence regardless of the degree of belief in a just world similarly. The fourth hypothesis was not supported. Iranian auditors with pre-conventional thinking and weak belief in a just world maintain independence of mind less than conventional and post-conventional auditors; but they are still more independent than pre-conventional auditors who have a strong belief in a just world. Results indicated that ethical reasoning and belief in a just world have influence on independence of mind in Iranian auditors. Auditor's competence in resisting client management's request increases when ethical reasoning develops; though in a way that auditors at post-conventional and conventional levels of moral development have the same competence higher than pre-conventional auditors in maintaining an independent mind. This study found a positive association too; however auditors with post-conventional and conventional levels are equally influenced by their cognitive structure. The belief in a just world has not any determinant role in leading Iranian auditor's behavior and decision; rather it only moderates the effect of ethical reasoning and this moderating effect only appears in pre-conventional thinking. Iranian pre-conventional auditor's competence in maintaining an independent mind is influenced by their belief in a just world; so that having a weak belief in a just world makes them more capable of resisting management's request. The characteristic of pre-conventional thinking is to act by considering direct physical consequences of actions; an individual tries to avoid physical damage to self through obeying the laws and regulations. Auditors with strong belief in a just world believe that justice mechanism is so that they will be compensated according to their actions and behaviors. This belief goes to the same direction of their cognitive structure so they concentrate more on personal physical outcomes and consequences. Thus, in making professional decisions they put more emphasis on personal outcomes of a decision and show less independence of mind. The belief in a just world does not influence independence of auditors with conventional thinking. These auditors regardless of personal outcomes of the audit report remain similarly independent. Hence their personal belief about the just or unjust world does not influence their professional decision; they try to act up to the expectations of professional society. Iranian auditors with post-conventional thinking do not take effect of their belief in a just world in issuing an independent opinion. In this level of ethical reasoning auditors with a strong belief in a just world and auditors with a weak belief in a just world have same resistance to client management's request. Finally, considering the similar competence of post-conventional and conventional auditors and the great population of these two groups in the study, it can be said that cognitive structure of the majority of Iranian auditors is so that promotes their competence in ignoring conflict of interest's pressures and enables them to issue reports consistent with their real professional opinion.

All the studies about the performance measurement are classified in two categories: First, those which are concerned with the performance measuring systems (PMSs) as a whole and second, those studies which are concentrating on the measuring criteria and reasons of using PMSs. The former are typically theoretical, fundamental, and holistic studies and the latter are mainly known as empirical and or semi-empirical researches which are generally practical and field studies. Using PMSs has a wide range of functions and applications. Nonetheless, there is not a unique and generally accepted theory about the effective reasons of using PMSs. There are several reasons for using PMSs explained through theoretical and empirical research literature so far.This study aims to analyze the effects of an organizational factor called as Organizational Culture on the way and reasons of using PMSs. The main questions of this research are:1- How do the reasons of using PMS vary under various organizational cultures?2- Does a change in the organizational culture affect the aims of using PMSs?Hypotheses:H1: The managers of culturally controlling organizations tend more to use PMSs for “Focusing on Organizational Attention” than the managers of flexible organizations.H2: The managers of culturally controlling organizations tend less to use PMSs for “Diagnostically Monitoring” than the managers of flexible organizations.H3: The managers of culturally controlling organizations tend less to use PMSs for “Strategic Decision Making” than the managers of flexible organizations.H4: The managers of culturally controlling organizations tend more to use PMSs for “Legislating” than the managers of flexible organizations.H5: The managers of culturally flexible organizations tend to use more various PMSs than the managers of controlling organizations.H6: Using PMSs for “Focusing on Organizational Attention” has an indirect correlation with the diversity of PMSs.H7: Using PMSs for “Diagnostically Monitoring” has a direct correlation with the diversity of PMSs.H8: Using PMSs for “Strategic Decision Making” has a direct correlation with the diversity of PMSs.H9: Using PMSs for “Legislating” has an indirect correlation with the diversity of PMSs. The data required for the research, are collected through questionnaires from a 220 random sample out of 400 top managers of manufacturing companies in Tehran Stock Exchange. The research project ran during the first half of 1390 (Mar – Sep 2011); and finally (i.e. correctly usable) collected questionnaires are 93, with a 42.27% return rate. Table H1 and H6: Even though the Controlling Organizations would logically tend to use PMSs for more controls, it is not statistically meaningful to express a difference between Controlling organizations and Flexible ones in this sense. The rejection of H1 is mostly explainable within the Iranian cultural environment, where control is traditionally vital for all managers. This shows a cultural distance between Iranian manufacturing companies and their developed sisters around the world. On the other hand, the aim of using PMS was logically expected to be effective on the diversity of PMSs. It is literally argued that for those managers who perform a centrally controlling strategy, using a unique PMS would be more preferable. But, the rejection of H6 shows that we cannot support the logically expected hypothesis. The rejection of H1 and H6 together suggests that our organizational culture is slightly moving from a traditional body toward the modern systems.H2 and H7: Both are meaningfully supported. This suggests a cultural environment within which the managers are mostly guiding the organization through expanding intercommunications rather than controlling it.H3 and H8: Both are meaningfully supported. Flexible organizations seek a tendency toward changes in their strategies; this makes them more attendant to use PMSs for strategic decision making on one hand and use more various PMSs on the other hand.H4 and H9: In spite of the logical background of H4 through which the controlling organizations seek more tools for legislating their functions and activities, the examination does not support the hypothesis; hence it could be stated that the mangers of culturally controlling organizations (in comparison with the managers of the flexible organizations) do not use PMSs for legislating. The rejection of H1 and H9 together might be explained as impulsiveness in the degree of flexibility in Iranian organizational culture for its moving forward status.H5: The hypothesis 5 is not rejected. This suggests that despite the fact that some of the research hypotheses are rejected for the most probably an impulsiveness in the degree of cultural flexibility within the Iranian organizations (in TSE), it is declared that the managers of culturally flexible organizations tend to use more various PMSs than the managers of controlling organizations.

Jensen (1986) predicts that when managers maintain more free cash flow in hand, they commit opportunistic behaviors such as investing in projects with fewer net cash, less amount of effort for creating revenues, causing more unnecessary expenses, wasting revenues, and other such things. He also predicts that an increase in financial leverage enforces managers to be more disciplined and would reduce their opportunistic behaviors, because paying debt reduces the free cash flow. On the other hand, establishing debt has influence on free cash flows. Therefore, there is an interaction between risk of free cash flow and establishing a debt. Also there are other factors that influence both of these factors. Consequently, this research tests the efficiency of the ownership structure and the debt policy as a mechanism of resolution of agency conflicts between shareholders and managers due to the problem of overinvestment, and in the limitation of the problem of the free cash flowI. n other words, in this study the free cash flow theory of Jensen (1986) with some of relevant variable are investigated. Hypotheses: According to the research questions and literature review, research hypotheses are as follows: a) Hypothesis related to endogenous variables (free cash flow risk and debt policy):There is a significant relation between the free cash flow risk and debt policy. b) Hypotheses related to exogenous variables (effective on endogenous variable offree cash flow): 2. There is a significant relation between ownership concentration (Conc) and free cash flow risk. 3. There is a significant relation between institutional ownership level (Inst) and free cash flow risk.There is a significant relation between managerial stock ownership (Man) and free cash flow risk. There is a significant relation between state ownership (State) and free cash flow risk. There is a significant relation between size of the firm (Size) and free cash flow risk. c) Hypothesis related to exogenous variables (effective on endogenous variable offree cash flow): 7. There is a significant relation between tangible asset structure (Tang) and debt policy. 8. There is a significant relation between tax paid (Tax) and debt policy. 9. There is a significant relation between growth opportunity (Growth) and debt policy. There is a significant relation between size of the firm (Size) and debt policy. There is a significant relation between profitability (profit) and debt policy. There is a significant relation between fluctuation in price (Risk) and debt policy. There is a significant relation between industry (Ind) and debt policy. Because of investigating cross relations in this study, variables were divided into two groups: exogenous and endogenous. Consequently, we used the simultaneous equations system for estimating the equations. Hence, this study uses a two-equation model with free cash flow and leverage as the variables. Additional leverage appears as a regressor in the free cash flow equation and vice-versa. Thus, the leverage and free cash flow are simultaneously determined. The models are as follow: = + + + + + + + = + + + + + + + + + Free cash flow risk (FCF) equation includes long term debt (Leverage), ownership concentration (Conc), institutional ownership level (Inst), managerial stock ownership (Man), state ownership (State) and size of the firm (Size). While leverage equation, includes measures of Free cash flow risk (FCF), firm size (Size), tangible assets structure (Tang), tax paid (Tax), growth opportunity (Growth), profitability (Profit), fluctuation at price (Risk) and industry (Ind). Referring to the result of statistical tests, ownership concentration (Conc) and state ownership (State) variables have the negative and significant effect and debt policy, and the level of institutional ownership have a positive and significant effect on the risk of free cash flow. Also, risk of free cash flow, tax and size variables have the positive and significant effect, and earning variable exhibits the negative and significant effect on the debt policy. Discussion and Results from research hypotheses disapprove of Jensen’s theory of free cash flows (1986). In other words, current study shows that using debt for reducing agency cost from free cash flows is not a suitable solution but increase it. In fact, debting that Jensen (1986) suggests for reducing free cash flows causes increase in free cash flows itself from one side and earning of free cash flow investing from the other side,. In addition, the results of statistical tests show that, ownership concentration (Conc) and state ownership results in a decrease in free cash flow risk. Also in relevance with debt policy variable, statistical test shows that it influences free cash flow risk.