IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i12p9578-d1171101.html
   My bibliography  Save this article

Analysis of the Impact of External Auditors’ Autonomy on Financial Accounting Information Quality Case Study Commercial Banks in Northern Iraq

Author

Listed:
  • Khowanas Saeed Qader

    (Department of Accounting and Finance, Cyprus International University, Mersin 10, Lefkosa 99040, Turkey
    Department of Accounting and Finance, Lebanese French University, Erbil 44001, Iraq)

  • Kemal Cek

    (Department of Accounting and Finance, Cyprus International University, Mersin 10, Lefkosa 99040, Turkey)

Abstract

The purpose of this research is to determine how independent auditors affect the integrity of financial accounting data at commercial banks in northern Iraq. A total of 342 employees from commercial banks in Northern Iraq were surveyed using a quantitative research technique. The research uses structural equation modelling (SEM) to examine the hypothesis that the independence of external auditors improves the integrity of financial accounting information. The study’s findings indicate that financial accounting information quality in commercial banks in Northern Iraq is significantly affected by the independence of external auditors. This suggests that giving external auditors more leeway to do their jobs could boost the quality of financial accounting information at these institutions. Policymakers, auditors, and managers at commercial banks in northern Iraq can learn a lot from these results. In sum, this research adds to the existing body of work on the independence of external auditors and the accuracy of financial accounting information, with a focus on commercial banks in Northern Iraq. This research shows that increasing the independence and autonomy of external auditors in commercial banks could have positive effects on the quality of financial accounting information.

Suggested Citation

  • Khowanas Saeed Qader & Kemal Cek, 2023. "Analysis of the Impact of External Auditors’ Autonomy on Financial Accounting Information Quality Case Study Commercial Banks in Northern Iraq," Sustainability, MDPI, vol. 15(12), pages 1-21, June.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:12:p:9578-:d:1171101
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/12/9578/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/12/9578/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pavlopoulos, Athanasios & Magnis, Chris & Iatridis, George Emmanuel, 2019. "Integrated reporting: An accounting disclosure tool for high quality financial reporting," Research in International Business and Finance, Elsevier, vol. 49(C), pages 13-40.
    2. repec:eme:maj000:02686900310482632 is not listed on IDEAS
    3. Joseph F. Brazel & Christopher P. Agoglia, 2007. "An Examination of Auditor Planning Judgements in a Complex Accounting Information System Environment," Contemporary Accounting Research, John Wiley & Sons, vol. 24(4), pages 1059-1083, December.
    4. Wang, Xin & Song, Di, 2021. "Does local corruption affect IPO underpricing? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 73(C), pages 127-138.
    5. Pierangelo Rosati & Fabian Gogolin & Theo Lynn, 2022. "Cyber-Security Incidents and Audit Quality," European Accounting Review, Taylor & Francis Journals, vol. 31(3), pages 701-728, May.
    6. Harris, M. Kathleen & Williams, L. Tyler, 2020. "Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees," Advances in accounting, Elsevier, vol. 50(C).
    7. Cecilia Langella & Eugenio Anessi-Pessina & Elena Cantù, 2021. "What are the required qualities of auditors in the public sector?," Public Money & Management, Taylor & Francis Journals, vol. 41(6), pages 466-476, August.
    8. Melati Ayu Lestari & Sutrisno T & Aulia Fuad Rahman, 2020. "Auditors’ professional commitment, time budget pressure, independence, and audit quality: The Audit Board of the Republic of Indonesia Experience," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(6), pages 263-273, October.
    9. Ivy Munoko & Helen L. Brown-Liburd & Miklos Vasarhelyi, 2020. "The Ethical Implications of Using Artificial Intelligence in Auditing," Journal of Business Ethics, Springer, vol. 167(2), pages 209-234, November.
    10. L.S. Wiyantoro & F. Usman, 2018. "Audit Tenure and Quality to Audit Report Lag in Banking," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 417-428.
    11. Mahdi Salehi & Mohammed Ibrahim Jebur & Saleh Orfizadeh & Ali Mohammed Abbas Aljahnabi, 2022. "The Relationship between Audit Adjustments and Audit Quality in Iraq," JRFM, MDPI, vol. 15(8), pages 1-17, July.
    12. Bashaer Khudhair Abbas Alkafaji & Mahmoud Lari Dashtbayaz & Mahdi Salehi, 2023. "The Impact of Blockchain on the Quality of Accounting Information: An Iraqi Case Study," Risks, MDPI, vol. 11(3), pages 1-22, March.
    13. Usman Sattar & Sohail Ahmad Javeed & Rashid Latief, 2020. "How Audit Quality Affects the Firm Performance with the Moderating Role of the Product Market Competition: Empirical Evidence from Pakistani Manufacturing Firms," Sustainability, MDPI, vol. 12(10), pages 1-20, May.
    14. Pilipus Ramandei & Abdul Rohman & Dwi Ratmono & Imam Ghozali, 2020. "Interactions of Financial Assistance and Financial Reporting Competency: Evidence From Local Government in Papua and West Papua Indonesia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 1-12, January.
    15. L.S. Wiyantoro & F. Usman, 2018. "Audit Tenure and Quality to Audit Report Lag in Banking," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 417-428.
    16. McCallig, John & Robb, Alastair & Rohde, Fiona, 2019. "Establishing the representational faithfulness of financial accounting information using multiparty security, network analysis and a blockchain," International Journal of Accounting Information Systems, Elsevier, vol. 33(C), pages 47-58.
    17. Sarhan, Ahmed A. & Ntim, Collins G. & Al-Najjar, Basil, 2019. "Antecedents of audit quality in MENA countries: The effect of firm- and country-level governance quality," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 35(C), pages 85-107.
    18. Knechel, W. Robert & Thomas, Edward & Driskill, Matthew, 2020. "Understanding financial auditing from a service perspective," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    19. Cameron Morrill & Janet Morrill, 2003. "Internal auditors and the external audit: a transaction cost perspective," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 18(6/7), pages 490-504, August.
    20. Otniel Safkaur & Nunuy Nur Afiah & Sugiono Poulus & Muhammad Dahlan, 2019. "The Effect of Quality Financial Reporting on Good Governance," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 277-286.
    21. Nicola Raimo & Filippo Vitolla & Arcangelo Marrone & Michele Rubino, 2021. "Do audit committee attributes influence integrated reporting quality? An agency theory viewpoint," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 522-534, January.
    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. Han, Hongdan & Shiwakoti, Radha K. & Jarvis, Robin & Mordi, Chima & Botchie, David, 2023. "Accounting and auditing with blockchain technology and artificial Intelligence: A literature review," International Journal of Accounting Information Systems, Elsevier, vol. 48(C).
    2. Elisabeth Sinnewe & Troy Yao & Mahbub Zaman, 2021. "Informing or obfuscating stakeholders: Integrated reporting and the information environment," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3893-3906, December.
    3. Amir Hossain & Sudipta Bose & Abul Shamsuddin, 2023. "Diffusion of integrated reporting, insights and potential avenues for future research," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2503-2555, June.
    4. Wa Ode Irma Sari & Bambang Subroto & Abdul Ghofar, 2019. "Corporate governance mechanisms and audit report lag moderated by audit complexity," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(6), pages 256-261, October.
    5. Chan, Kam C. & Li, Guangzi, 2022. "Prior banking relationships and long-term IPO performance," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 123-134.
    6. Weidong Zhang & Jenny Jing Wang & Guomin Luo & Yanqi Sun, 2021. "Tunnelling in asset‐injecting private placements: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5501-5522, December.
    7. Nicola Raimo & Filippo Vitolla & Valentina Minutiello & Arcangelo Marrone & Patrizia Tettamanzi, 2022. "Readability of integrated reports: Evidence from worldwide adopters," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 524-534, May.
    8. Zhang, Chanyuan (Abigail) & Cho, Soohyun & Vasarhelyi, Miklos, 2022. "Explainable Artificial Intelligence (XAI) in auditing," International Journal of Accounting Information Systems, Elsevier, vol. 46(C).
    9. Filippo Vitolla & Nicola Raimo & Michele Rubino & Antonello Garzoni, 2019. "How pressure from stakeholders affects integrated reporting quality," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1591-1606, November.
    10. Hawkar Anwer Hamad & Kemal Cek, 2023. "The Moderating Effects of Corporate Social Responsibility on Corporate Financial Performance: Evidence from OECD Countries," Sustainability, MDPI, vol. 15(11), pages 1-20, May.
    11. Omid Mehri Namakavarani & Abbas Ali Daryaei & Davood Askarany & Saeed Askary, 2021. "Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections," JRFM, MDPI, vol. 14(6), pages 1-18, June.
    12. Bonsón, Enrique & Lavorato, Domenica & Lamboglia, Rita & Mancini, Daniela, 2021. "Artificial intelligence activities and ethical approaches in leading listed companies in the European Union," International Journal of Accounting Information Systems, Elsevier, vol. 43(C).
    13. Vitiana L'Abate & Nicola Raimo & Francesco Albergo & Filippo Vitolla, 2024. "Social media to disseminate circular economy information. An empirical analysis on Twitter," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 528-539, January.
    14. Jin, Justin & Li, Na & Liu, Suyi & Khalid Nainar, S.M., 2023. "Cyber attacks, discretionary loan loss provisions, and banks’ earnings management," Finance Research Letters, Elsevier, vol. 54(C).
    15. Radu USZKAI & Cristina VOINEA & Toni GIBEA, 2021. "Responsibility Attribution Problems In Companies: Could An Artificial Moral Advisor Solve This?," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(1), pages 951-959, November.
    16. Zhang, Yuyang & Uchida, Konari & Dong, Liping, 2020. "External financing and earnings management: Evidence from international data," Research in International Business and Finance, Elsevier, vol. 54(C).
    17. Kunytska-Iliash, Marta, 2023. "Assessment of the financial security of agriculture in Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(1), March.
    18. Zhang, Yimei & Smith, Thomas, 2023. "The impact of customer firm data breaches on the audit fees of their suppliers," International Journal of Accounting Information Systems, Elsevier, vol. 50(C).
    19. Jihai Lu & Sohail Ahmad Javeed & Rashid Latief & Tao Jiang & Tze San Ong, 2021. "The Moderating Role of Corporate Social Responsibility in the Association of Internal Corporate Governance and Profitability; Evidence from Pakistan," IJERPH, MDPI, vol. 18(11), pages 1-22, May.
    20. Sojung Lucia Kim & Thompson S.H. Teo & Anol Bhattacherjee & Kichan Nam, 0. "IS auditor characteristics, audit process variables, and IS audit satisfaction: An empirical study in South Korea," Information Systems Frontiers, Springer, vol. 0, pages 1-15.

    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:jsusta:v:15:y:2023:i:12:p:9578-:d:1171101. 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.