Volume 19, No. 1, 2022
The Impact of Audit Quality in Reducing the Creative Accounting Practices and Activating External Investments (An Applied Study to the Iraqi Stock Exchange)
Fadhil Shaalan Jabbar
Abstract
The economic and the technological developments in the investment environment have posed serious challenges for reporting, measuring, and presenting accounting information. Creative accounting poses a major threat to the interests of shareholders and beneficiaries of the firms’ financial reports resulted from the accountants’ manipulations of the methods, procedures and policies exploiting their knowledge and experiences, with the accounting standards, to manipulate figures to improve the outlook of the economic unity and to give misleading data. Since auditors are regarded as shareholders and stakeholders' agents in expressing an impartial technical opinion on the financial statements, their liability is not to disclose such practices and procedures at a time when the conduct of the profession should be in line with the objectives of the users of the financial statements. Creative accounting practices are among those topics that have preoccupied practitioners, professionals, and investors due to the negative impacts they have on companies. The management conduct of information concealment, or false submission, is often attributed to the inclusion of a financial reporting, which in return creates distrust to the dealers and investors, that consequently affects the foreign investment negatively in the Iraqi environment. Hence, the research firstly aims to explain the impact of audit quality in reducing of creative accounting practices and how to encourage the investors.
Pages: 6208-6236
Keywords: Creative Accounting, Amortization Methods, Iraqi Stock Exchange.