The Interactive Role of an Auditor's Expertise in the Relationship between Abnormal Transactions with Biased People and Financial Statement Fraud: Testing Agency Theory

The objective of the present study is to review the interactive role of an auditor's expertise in the relationship between abnormal transactions with biased people and financial statement fraud with an emphasis on testing the agency theory in Tehran Stock Exchange.
With respect to the type of data in this research, logistic regression has been used. The statistical sample consisted of 118 corporations from 2014 to 2021, which were chosen by systematic removal.
The results showed that segments of abnormal transactions with biased people increase financial statement fraud. Moreover, an auditor's expertise moderates the intensity of positive relationships between abnormal transactions with biased people and financial statement fraud.
With regard to the agency theory, the motivation behind abnormal transactions with biased people is that they want to seize the corporation's capital and that the managers distort financial statements in order to conceal the truth. Furthermore, since the specialist auditors monitor a great portion of the industrial corporations, they are of an expertise and experience above other accountants; therefore, they are more capable to detect financial statement deviation and fraud in terms of abnormal transactions with biased people.