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The effect of financial statement restatement severity on auditors’ opinion and audit report paragraphs (evidence of the quality of financial statements)
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Abstract: (1294 Views) |
| The restatement of financial statements is a matter of low quality of reporting, and auditors generally have to adjust the types and paragraphs of the audit report for the poor quality of the financial statements. Restatement of financial statements is very common in Iran and more than half of the companies listed on the Tehran Stock Exchange will restate their financial statements in the following year and reduce the reported profit of the last year. The purpose of this study is to identify the impact of the severity of financial statements restatement on the type of auditors' report, pre-opinion paragraphs, special emphasis paragraphs, and other explanatory paragraphs. The research period is from 2010 to 2018 and the sample consists of 107 companies listed on Tehran Stock Exchange. The results of multiple regression analysis show that poor quality of financial statements based on severity criteria of restatement does not affect the type of audit report and also the number of conditional paragraphs, special emphasis paragraphs, and other explanatory paragraphs. Infact, auditors did not issue adjusted auditing reports for the following year with high severity of financial statement restatements to inform the users about the poor quality of financial statements. Thus, the reliability of the audit reports is low based on the severity of the restatement. |
Article number: 11 |
| Keywords: The Severity of Financial Statement Restatements, Audit Report Type, Audit Report Paragraphs |
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Full-Text [PDF 1327 kb]
(224 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2019/12/31 | Accepted: 2020/04/19 | Published: 2022/01/1
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