Internal Audit, Board of Directors and Financial Reporting Quality

High-quality internal audit is expected to lead to high-quality financial reporting. High-quality financial reporting expresses itself in earning quality. Earning quality has been playing a key role in capital market for a long time. Finance users pay special attention to earning quality because they make their decision based on it. On the other hand, the market economy will experience awful, irrecoverable losses if organization’s performance isn’t reflected in its earnings. Thus this research aims at investigating the relationship between internal audit quality, board of director quality and financial reporting. Research data, obtained from Tehran stock exchange’s official website, showed that ۲۲۳ firms had internal audit department. Only ۱۳۰ firms met involvement criteria, to which research questionnaires were sent. Finally ۵۹ questionnaires were approved as acceptable, and were taken as research sample. Findings showed that high-quality internal audit will lead to high-quality financial reporting. Also, strong board of directors will reinforce this relation.  

Keywords:

Internal Audit quality , financial reporting quality , board of director quality