Effects of leadership and accounting capacity on accountability through the quality of financial reporting

One of the main ways to prove the improvement of the performance of the public sector is through financial statements and increasing the quality of financial reporting, which should lead to the improvement of accountability. Using institutional and contingency theory, this article examines the effect of leadership and accounting capacity on the quality of financial reporting and accountability, as well as the impact of financial reporting quality on accountability in the welfare organization.

In terms of purpose, this research is applied and is placed in the category of descriptive-survey researches. The statistical population of the study includes 175 managers and employees of welfare organization finance in Bushehr, Ilam, Fars, Hormozgan, Kohgiluyeh and Boyer-Ahmad provinces. To test the five research hypotheses, 122 questionnaires with a five-level Likert scale were completed and the structural equation modeling method of confirmatory factor analysis with partial least squares approach and correlation coefficient and Smart PLS software was used.

Findings show that accounting capacity has no effect on financial reporting quality and accountability, leadership has a positive effect on financial reporting quality and accountability and the quality of financial reporting will lead to increased accountability.

The results of this study prove the importance of leadership in organizational accounting reforms. It also shows that financial reporting quality provides an accurate assessment of the accountability of public sector organizations.Enhancing knowledge: Studies show that the present study does not have a similar sample in Iran in terms of the subject, goal, and method of measuring the leadership and accounting capacity variables. The results of this research reveal a new insight regarding the importance of leadership and the impact of the quality of financial reporting on accountability in public sector organizations.