IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v10y2022i3p60-d871926.html
   My bibliography  Save this article

The Role of Internal Audit to Reduce the Effects of Creative Accounting on the Reliability of Financial Statements in the Jordanian Islamic Banks

Author

Listed:
  • Baker Akram Falah Jarah

    (Faculty of Business, Amman Arab University, Amman 11953, Jordan)

  • Mufleh Amin AL Jarrah

    (Faculty of Business, Amman Arab University, Amman 11953, Jordan)

  • Murad Ali Ahmad Al-Zaqeba

    (Faculty of Business, Amman Arab University, Amman 11953, Jordan)

  • Mefleh Faisal Mefleh Al-Jarrah

    (Islamic Economics and Banking Department, Faculty of Shari and Islamic Studies, Yarmouk University, Irbid 21163, Jordan)

Abstract

The purpose of this study is to look into the role of internal audit (IA) in reducing the effects of creative accounting (CA) on financial statement reliability in Jordanian Islamic Banks. The research study used the survey methodology to examine the role of internal audit (including independence and objectivity, verifiability, professional care, and neutrality) to reduce the effects of CA on the reliability of financial statements in Jordanian Islamic Banks. The population consists of all practicing auditors in Jordanian Islamic Banks, with a sample of 100 practicing auditors chosen from the total population of 143 auditors using a simple random selection approach. The questionnaire was distributed to the internal auditors working in these banks. Moreover, the primary data were analyzed using the partial least squares (3.3.3) software. The results showed that there was a role for IA (including independence objectivity, verifiability, professional care, and impartiality) in limiting the effects of CA on the reliability of financial statements in Jordanian Islamic Banks.

Suggested Citation

  • Baker Akram Falah Jarah & Mufleh Amin AL Jarrah & Murad Ali Ahmad Al-Zaqeba & Mefleh Faisal Mefleh Al-Jarrah, 2022. "The Role of Internal Audit to Reduce the Effects of Creative Accounting on the Reliability of Financial Statements in the Jordanian Islamic Banks," IJFS, MDPI, vol. 10(3), pages 1-16, July.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:3:p:60-:d:871926
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/10/3/60/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/10/3/60/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Agoglia, Christopher P. & Hatfield, Richard C. & Lambert, Tamara A., 2015. "Audit team time reporting: An agency theory perspective," Accounting, Organizations and Society, Elsevier, vol. 44(C), pages 1-14.
    2. Nofan Hamed Al-Olimat & Mohannad Obeid Al Shbail, 2021. "The Mediating Effect of External Audit Quality on the Relationship Between Corporate Governance and Creative Accounting," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 149-157, January.
    3. Usang Edet Usang, Obal & Salim, Basariah, 2018. "The Relationship Between Institutional Environment, Internal Audit And Performance Of Local Governments In Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 7(2), pages 120-147, December.
    4. Alina Beattrice Vladu & Dumitru MatiÅŸ, 2010. "Corporate Governance And Creative Accounting: Two Concepts Strongly Connected? Some Intersting Insights Highlighted By Constructing The Internal History Of A Literature," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(12), pages 1-33.
    5. Diana Elisabeta BALACIU & Victoria BOGDAN & Ioana Teodora MESTER & Dana GHERAI, 2012. "Empirical Evidences of Romanian Auditors’ Behavior Regarding Creative Accounting Practices," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 11(2), pages 213-238, June.
    6. Victor Munteanu & Lavinia Copinschi & Carmen Luschi & Anda Laceanu, 2016. "Internal Audit – Determinanat Factor In Preventing And Detecting Fraud Related Activity To Public Entities Financial Accounting," Knowledge Horizons - Economics, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 8(2), pages 14-21, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alina Beattrice Vladu & Dumitru MatiÅŸ & Oriol Amat Salas, 2012. "True And Fair View And Creative Accounting Conceptual Delimitations Based On Papineau`S Tree Methodology," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(14), pages 1-9.
    2. Lucian Cernușca & Bogdan Cosmin Gomoi, 2015. "A professional accountants and managers’ point of view on elaborating and grounding the accounting policies," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 15(1), pages 59-70.
    3. Mariana Peprníčková & Lucie Jandová, 2017. "The Level of Creative Accounting in the Practice of Czech Accounting Entities [Míra kreativního účetnictví v praxi českých účetních jednotek]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2017(4), pages 57-86.
    4. Tha’er Amjed Mahmoud Ababneh & Mehmet Aga, 2019. "The Impact of Sustainable Financial Data Governance, Political Connections, and Creative Accounting Practices on Organizational Outcomes," Sustainability, MDPI, vol. 11(20), pages 1-16, October.
    5. Beau, Pauline & Jerman, Lambert, 2022. "Bonding forged in “auditing hell”: The emotional qualities of Big Four auditors," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 83(C).
    6. Herbei (Mot) Ioana & Cernusca Lucian, 2015. "Perceptions Regarding Treatments And Creative Accounting Policies," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 173-187, April.
    7. M. Ardiansyah Syam & Syahril Djaddang & Mulyadi & Imam Ghozali, 2020. "The Attributes of Dysfunctional Audit Behavior (DAB): Second Order Confirmatory Factor Analysis," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 311-322, April.
    8. FARAGALLA Widad Atena, 2015. "Stereotypes Regarding Accounting Profession," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 436-439, December.
    9. Diana-Andreea, TRAISTARU, 2016. "The Necessity For A Fundamental Relationship Between Accounting Education And Profession On The Basis Of Accounting Standards Application," Management Strategies Journal, Constantin Brancoveanu University, vol. 31(1), pages 97-102.
    10. Ben Boubakary, 2022. "Audit interne et gouvernance d'entreprise : une lecture théorique au sein des entreprises publiques," Working Papers halshs-03705132, HAL.
    11. Smith, Kenneth J. & Emerson, David J., 2017. "An analysis of the relation between resilience and reduced audit quality within the role stress paradigm," Advances in accounting, Elsevier, vol. 37(C), pages 1-14.
    12. MIHALCEA Mihaela Maria, 2020. "Do Romanian Companies And Their Stakeholders Benefit From The Advantages Of A Good Corporate Governance? Empirical Research On The Level Of Compliance," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 284-292, July.
    13. Carolyn Mactavish & Susan McCracken & Regan N. Schmidt, 2018. "External Auditors' Judgment and Decision Making: An Audit Process Task Analysis," Accounting Perspectives, John Wiley & Sons, vol. 17(3), pages 387-426, September.
    14. Tim D. Bauer & Sean M. Hillison & Mark E. Peecher & Bradley Pomeroy, 2020. "Revising Audit Plans to Address Fraud Risk: A Case of “Do as I Advise, Not as I Do”?," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2558-2589, December.
    15. Pantic, B., 2016. "Comparability of financial reports: A literature review of most recent studies," Working Papers 6451, Graduate School of Management, St. Petersburg State University.
    16. Juhendra Debbarma & Chinmoy Roy, 2023. "Effects of Corporate Governance on Creative Accounting Practices: Evidence from NSE-listed Companies in India," Indian Journal of Corporate Governance, , vol. 16(1), pages 52-78, June.
    17. Rafael Morales-Sánchez & Manuel Orta-Pérez & M. Ángeles Rodríguez-Serrano, 2020. "The Benefits of Auditors’ Sustained Ethical Behavior: Increased Trust and Reduced Costs," Journal of Business Ethics, Springer, vol. 166(2), pages 441-459, October.
    18. Ndebugri, Haruna & Tweneboah Senzu, Emmanuel, 2017. "Analyzing the critical effects of creative accounting practices in the corporate sector of Ghana," MPRA Paper 81113, University Library of Munich, Germany, revised 04 Sep 2017.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:10:y:2022:i:3:p:60-:d:871926. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.