فصلنامه بررسی های حسابداری و حسابرسی
پیاپی 114 (زمستان 1402)

As audit committees are expected to assess the design and implementation of internal controls, the challenge of supervising financial reporting controls has become more prominent. This article examines how audit committee members oversee internal controls for financial reporting. The article uses agency theory and institutional theory to explain the role of audit committees as corporate governance monitors. Since there is a gap in the literature on how audit committees perform their supervision of internal controls, this research aims to shed light on the process of audit committee oversight of internal control over financial reporting (ICFR) and seeks to investigate the factors that influence the variation in audit committee internal control over financial reporting oversight.

The study collected the required data from 97 audit committee members of companies listed on the Tehran Stock Exchange. These members serve on the largest audit committee within their respective companies, determined by annual income. A questionnaire was administered to audit committee members to assess the extent of their engagement in overseeing different facets of internal control over financial reporting. The evaluation was based on the 17 principles outlined in the 2013 Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Framework. The primary questions of the questionnaire addressed 13 out of the 17 principles of the COSO internal control framework, encompassing all five components. Specifically, these questions delved into three principles within the control environment, four principles in risk assessment, two principles in control activities, as well as principles related to information and communication, and monitoring activities. The collected data was analyzed using EViews software.

The statistical analysis of the gathered data revealed that audit committee members devote the most time to monitoring activities, control activities, and risk assessment areas respectively, and the least time to control environment areas. Moreover, the regression analysis of the study showed that the industry of the companies, specifically financial services, or insurance, is positively related to the extent of overall audit committee oversight of internal control over financial reporting. Other characteristics such as age and internal audit experience do not impact the level of oversight.

This study investigated the focus and allocation of audit committee members' supervision on internal control over financial reporting (ICFR), as well as the factors influencing the variability in audit committee oversight. The achieved results indicated that most of the audit committee members of Tehran Stock Exchange companies do not have specific procedures, processes, and metrics to oversee the ICFR in the audit committees. Furthermore, audit committee members allocate the least time to the most critical component of internal controls, namely, the control environment.

In recent years, the volatility of macroeconomic variables and the opacity surrounding the general direction of government economic policies have fostered an environment of uncertainty for the country's economic activities. The occurrence of economic policy uncertainty makes it more difficult for companies to secure financial resources, and they may not be able to support high-risk and high-yield investment projects due to a lack of funds. Companies become more risk-averse due to the shock of economic policy uncertainty. This relationship is valid under the criteria of unstable risk and profit volatility, regardless of whether the macroeconomic conditions are favorable or not. The effect of economic policy uncertainty on corporate risk-taking is also affected by product market competition and financial friction. Accordingly, the main purpose of this study is to identify the relationship between economic policy uncertainty and corporate risk-taking with the moderating role of product market competition and financial friction and the mediating role of financialization among the listed companies at the Tehran Stock Exchange.

This research is practical in terms of its objective. It employs descriptive-correlational research methodology, utilizing regression and correlation techniques to explore the relationship between variables. Thus, in terms of reasoning, it falls within the realm of inductive research. In this way, in terms of reasoning, it is placed in the group of inductive research. Additionally, this study embodies a positive theory, as conclusions are drawn based on the examination and testing of existing data. To achieve the goal of the research, 142 companies were selected as available samples from 2010 to 2019, and a total of 1,420 companies were examined for analysis. The uncertainty of economic policy was calculated using the seasonal economic indicators available on the Central Bank of Iran website for the Iranian years 1378 to 1399 (1999 to 2020). Ordinary least squares regression, Sobel test, and Panel data were used to test the research hypotheses.

According to the achieved results, there is a positive and significant relationship between economic policy uncertainty and corporate risk-taking. However, no evidence was found to indicate the moderating role of product market competition and financial friction on the relationship between economic policy uncertainty and corporate risk-taking. There is a negative and significant relationship between the uncertainty of economic policy and financialization, and as the uncertainty of economic policy increases, the level of financial assets in companies decreases. By entering financialization as a mediating variable in the main model, the mediating role is not confirmed.

As the findings showed, economic policy uncertainty leads to stronger risk-taking motivations i.e. when economic policy uncertainty is high, the motivation of the firm to invest is mainly opportunity expectations rather than risk aversion. The greater the uncertainty of economic policy, the more companies tend to accept risk to adapt to the market, achieve optimal performance, and use profitable opportunities. As economic policy uncertainty increases, the level of financial assets in companies decreases. In other words, companies are not separated from their main activities and are focused on investing and creating profitability in their main activities.

Recent research confirms the view that companies need foreign capital to finance their labor payments and financing frictions can affect labor investment. Real earnings smoothing can affect labor investment efficiency through its effect on market frictions caused by information asymmetry between managers and suppliers of external capital sources. The purpose of the current research is to investigate the effect of real earnings smoothing and its components on labor investment efficiency.
Since the results of the research can be used in the decision-making process, the present study falls within the domain of applied research, and since the data were collected based on the real information of the past, it qualifies as an ex-post facto. Furthermore, this research adopts a descriptive-correlational approach, aiming to explore and analyze the relationships between variables under study. The Labor Investment Efficiency is measured according to the framework proposed by Pinnock and Lillis (2007), while the variable of earnings smoothing through real activities and its components is assessed based on the methodologies outlined in the research of Tucker and Zarowin (2006). Additionally, the approach employed by Dou, Hope, and Thomas (2013) to isolate the components of earnings smoothing has been utilized in this study. Given the conditions and constraints applied to the statistical population of the study, a sample comprising 106 companies listed on the Tehran Stock Exchange was selected. This sample was then subjected to analysis using multivariate regression models.
 
The findings indicate that as the degree of real earnings smoothing rises, there is a corresponding increase in labor investment efficiency. This relationship holds for the informational component of real earnings smoothing as well, demonstrating a positive and significant association with labor investment efficiency. However, the influence of the garbling component on labor investment efficiency was not found to be significant.
According to the obtained results, it appears that managers employ real earnings smoothing as a means to communicate concealed information regarding the company's prospects. By smoothing earnings across consecutive periods, they aim to provide investors and creditors with a coherent and optimistic outlook on the company's future trajectory. Managers reduce information asymmetry by using signaling tools, which causes them to have the necessary financial resources for their investments in labor and make efficient decisions about that. In general, based on the private information signaling perspective, it can be concluded that real earnings smoothing serves as a mechanism for managers to convey their private insights into the company's future earnings. This practice helps mitigate information asymmetry between companies and foreign capital suppliers, consequently enhancing labor investment efficiency. Regarding the garbling component of real earnings smoothing and considering the rejection of the hypothesis of its effect on the efficiency of labor investment, it can be concluded that several potential factors could potentially neutralize this effect. These may include the ignorance or misdirection of certain market participants, the prevalence of irrational behaviors, a steadfast belief in stability, and an excessive emphasis on the informational component. Finally, in addition to highlighting the positive role of real earnings smoothing in increasing the efficiency of labor investment, considering the importance of this issue and also the lack of recognition of the management's intention of real earnings smoothing, this study suggests the need for further exploration in this field.

Considering the importance of sustainability in Islam, Islamic companies can play an important role in sustainable development by adhering to sustainability requirements and sustainability reporting. In Islam, there are valuable concepts for sustainability. While some authors have explored corporate sustainability reporting from an Islamic perspective, a comprehensive model that incorporates Islamic teachings alongside conventional frameworks is yet to be developed. In this regard, this research aims to present a model for identifying the key elements of corporate sustainability reporting with an emphasis on Islamic principles and values to gauge the Islamic companies sustainability activities disclosure level, including Iranian companies.
After identifying the primary elements of the model through a review of sustainability reports from a sample of Shariah-compliant companies in Malaysia and Indonesia, conducting an extensive literature review, and gathering expert opinions through thematic analysis, the fuzzy Delphi method was employed for further refinement. The statistical population in the implementation of the fuzzy Delphi method was sustainability reporting and Islamic finance experts who were selected based on purposive sampling and the identified initial elements were sent to them in the form of a questionnaire for screening in 2022.
In total, 203 indicators were identified through the review of sustainability reports of a sample of Shariah-approved companies in Malaysia and Indonesia, an extensive review of the literature, and soliciting opinions from experts using the thematic analysis method. Out of the total identified indicators, 158 indicators were related to conventional sustainability reporting standards and guidelines, and 45 indicators were related to companies' Islamic responsibility activities. Based on similarity, the indicators were placed in the form of 13 conventional components and four Islamic components. The components were also categorized in the form of four social, environmental, sustainability governance, and economic dimensions. In the social dimension, 84 indicators were identified which were classified into customer satisfaction, employee welfare, participation in the local community, and Islamic social responsibility activities components. The environmental dimension included 43 indicators classified into natural resource consumption management, pollution management, product and service innovation, and Islamic environmental responsibility activities components. The 46 identified indicators in the sustainability governance dimension were included in the components of sustainability reporting procedures, sustainability governance structure, shareholders' rights, and Sharia governance. The economic dimension also included 30 indicators classified into economic performance, indirect economic effects, supply chain management, the campaign against bribery and corruption, and Islamic economic responsibility activities components. In the screening stage using the fuzzy Delphi method, 21 indicators were removed and the model key elements were finalized in the form of 182 indicators, 17 components, and four dimensions.  
By validating the majority of the indicators identified in the model, it is evident that they are deemed significant from the perspective of the experts. In addition, the confirmation of the majority of Islamic indicators in each dimension of the model shows the importance of considering Islamic principles and values in completing the model elements. This research contributes to the body of knowledge on sustainability reporting and Islamic finance, offering a framework for Islamic companies to fulfill their obligations to God, stakeholders, and the environment.

Annual financial and non-financial reports play a crucial role in enhancing public understanding and facilitating communication with stakeholders. Organizations employ various strategies, including managing the tone and readability of their reports, to shape perceptions among their audience and shareholders. These efforts aim to encourage desirable performance and present a positive image of the organization's performance. Therefore, this study aims to investigate the impact of CEO power on financial reporting readability, considering the moderating role of profitability and corporate governance.
This study employs an applied approach with an inductive methodology. Multiple regression analysis using panel data is utilized to examine the research hypotheses. In this research, necessary theoretical information in the field of research was collected using a comprehensive literature review. Then, the necessary information for model estimation was collected. Accordingly, the sample comprises data from 82 companies listed on the Tehran Stock Exchange spanning the years 2011 to 2021, covering 11 years.
The results of the first hypothesis of the research indicate that the power of the CEO has a significant negative effect on financial reporting readability. Additionally, the results of the second hypothesis showed that firm profitability exacerbates the adverse impact of CEO power on financial reporting readability. Furthermore, the results of the third hypothesis indicate that corporate governance, as a moderating factor, does not significantly influence the relationship between CEO power and financial reporting readability.
Based on the Agency Theory and the Emotional Management Theory, the first hypothesis posits that powerful managers have personal interests and tend to disclose less, manipulated, or ambiguous information. The results of the second hypothesis also indicate that when firms perform significantly weaker than their peers in terms of profitability, management seeks to impair the analytical and processing abilities of users by using unstructured and disorderly textual narratives in annual reports, increasing the volume of pages, disclosing in footnotes, and using ambiguous sentences and words. Also, the results of the third hypothesis show that corporate governance cannot limit the negative impact of powerful CEO's motivations to manipulate the readability of corporate financial reports. These findings highlight the adverse impact of CEO power on financial reporting readability. It is anticipated that these insights will aid policymakers, including the Tehran Stock Exchange, in gaining a deeper understanding of CEOs' influence on financial reporting clarity. This understanding may prompt firms to adhere to guidelines, such as those implemented by the US Securities and Exchange Commission. These guidelines evaluate annual reports based on readability, aiming to control and mitigate opportunistic managerial behavior. Additionally, ranking annual reports based on readability can enhance corporate disclosure and transparency efforts.

The foundation of accounting knowledge has always been to provide essential information for users to make informed economic decisions. However, evidence suggests that the standards derived from the current policy-making process prevalent in accounting fail to be notably effective in providing valuable information for decision-making, especially for investors. The primary cause of this inefficiency and ineffectiveness in accounting policy-making stems from the dependence on linear reasoning. The policy-making process in accounting is plagued by an array of contradictions, disorders, repetitions, challenges, and provisional agreements among groups without a logical and unified framework. This research aims to analyze the content of the policy-making process in accounting and present a novel approach to rectify this process and strategically guide it towards fulfilling its objectives in light of the chaos theory.

This study adopts a mixed-methods research approach. Initially, content analysis was employed to extract components affecting patterns in the policy-making process. Specialized questionnaires tailored to these identified components were subsequently distributed to gather the opinions of experts. These questionnaires were crafted to evaluate both the prevailing policy-making process in accounting and the decision-making behaviors of accounting information users, especially those of investors. The statistical population consists of certified accounting experts, i.e., practicing auditors affiliated with the Iranian Association of Certified Public Accountants, Accounting Faculty members, accountants affiliated with the Iranian Institute of Certified Accountants, and other experts in the accounting policy-making process, its standards, and the economic decision-making process. Purposive sampling was then employed to select the participants. Out of 60 distributed questionnaires, 42 were completed and returned. Single-sample t-tests and regression analysis were then conducted to analyze data.

The research findings indicate that the investors’ decision-making process inherently follows a nonlinear pattern, whereas the accounting policymaking process has traditionally followed a linear approach. Therefore, as long as this inconsistency exists, there can be no improvements or changes in recognizing the informational needs of various user groups, establishing clear standard-setting directions, aligning standards with user needs, and avoiding crafting contradictory accounting standards, leading to a regressive and ineffective cycle. Furthermore, the use of the chaos theory principles can guide the accounting policymaking process toward a both realistic and efficacious trajectory.

The financial events and informational demands of accounting information users follow complex, ever-evolving nonlinear dynamics. Therefore, integrating the chaos theory methodologies into the accounting policymaking process can facilitate the development of effective standards that cater to the decision-making needs of accounting information users and fulfill the ultimate objectives of accounting knowledge.

The purpose of this study is to investigate the impact of moral intelligence on the professional judgment of auditors. It also seeks to rate the impact of each of the 10 components of ethical intelligence on the judgment of auditors.
This study is applied in its purpose and analytical-inferential in its implementation approach. The statistical population for this study comprised auditors from the Supreme Audit Court of Iran (SAC) across three provinces: Isfahan, Yazd, and Chaharmahal and Bakhtiari. The sample size consisted of 115 individuals selected from these provinces. Two standard questionnaires of moral intelligence and professional judgment of auditors (Cronbach's alpha 0.954 and 0.936, respectively) were used to collect the required data. Out of 115 distributed questionnaires, 104 questionnaires were usable. Analysis of research data was performed to test research hypotheses using the Spearman test and to rank the effect of ethical intelligence components on the judgment of auditors using the Friedman test and SPSS software.
The study findings reveal that all 10 components of moral intelligence significantly influence the professional judgment of auditors. Notably, the components of commitment, acknowledgment of mistakes and failures, and the ability to forgive one's mistakes demonstrated the most substantial impact on auditors' professional judgment.
In conclusion, the impact of all 10 components of moral intelligence manifests in performance aligned with principles, values, and beliefs. This includes attributes such as honesty, perseverance, commitment to doing what is right, honoring promises, taking personal responsibility for decisions, acknowledging mistakes and failures, and embracing the duty to serve others. Actively interested in others, the ability to forgive one's own mistakes, and the ability to forgive the mistakes of others were proven by the professional judgment of auditors. The components of moral intelligence were ranked based on their impact on the professional judgment of auditors, revealing a distinct hierarchy. At the forefront, fulfillment of the promise emerged as the most influential component, boasting an impact rate of 6.87. Following closely behind, admitting mistakes and failures garnered significant importance with an impact rate of 6.85. The ability to forgive one's own mistakes also proved to be a crucial factor, with an impact rate of 6.68. Moreover, performance grounded in principles, values, and beliefs held considerable sway over auditor judgment, registering an impact rate of 6.10. Similarly, honesty was deemed influential, with an impact rate of 6.08. Actively demonstrating interest in others and assuming responsibility for personal decisions shared a joint impact rate of 5.78, highlighting their significance in shaping auditor judgment. Accepting responsibility to serve others followed closely behind, with an impact rate of 5.70. Conversely, perseverance and insistence on the right exhibited a comparatively lower impact, with a rate of 4.90. Lastly, the ability to forgive the mistakes of others concluded the ranking, with an impact rate of 4.86.