The effect of independent audit quality on the quality of financial reporting in the listed companies in Tehran and Baghdad stock exchanges

Abstract

The primary purpose of this research is to investigate the relationship between the quality of the external audit and the quality of the financial reporting done by companies that are traded on the Tehran and Baghdad Stock Exchanges. The experience of the auditor in the sector, the auditor's reputation, and the auditor's length of service were utilized as determining factors for the quality of the external audit. In order to determine whether or not the reporting of financial data can be trusted, discretionary accruals are analyzed. The companies that are members of the Tehran Stock Exchange and the Baghdad Stock Exchange make up the statistical population for the current study. They were chosen using the process of systematic elimination, which was applied to 102 firms that were admitted to the Tehran Stock Exchange and 35 companies that were admitted to the Baghdad Stock Exchange. In order to examine the data, multiple regression analyses were performed. According to the findings of the study, the quality of financial reporting at the Baghdad Stock Exchange is not significantly impacted by the standard of external auditing. In addition, the independence of the Tehran Stock Exchange's financial reporting is directly and considerably impacted by the quality of the audits conducted by external parties. The findings, taken as a whole, suggested that in order for enterprises to function properly in Iraq they need a secure and politically stable environment. This, in turn, has an effect on the accuracy of the reports they provide. On the other hand, the profession of auditing in Iraq is still in its formative stages, and auditors need to have a deeper understanding of their respective industries.