The effect of Social Responsibility Disclosure on Audit Risk

Authors: Dahmarde Ghaleno, M., Yazdifar, H. and Zarei, H.

Journal: Auditing Research Journal

Volume: 1

Issue: 1

Pages: 7-30

Abstract:

According to the Auditing Standards, the entity may attempt to disclosing financial and non-financial information about its operation, and the auditor is required to evaluate this information. Social responsibility performance is typically included in this regard, and the independent auditor should attention to such specific information in adequately assessing audit risk. The primary purpose of this academic paper is to promptly investigate the possible relationship between social responsibility disclosure and audit risk in the Tehran Stock Exchange. In this regard, the content analysis method is used to measure social responsibility disclosure, and audit risk is calculated by the audit fees. To examine the hypotheses, Based on a sample of 93 firms data are gathered covering the period 2012–2019 applies ordinary least squares regression (OLS). We subsequently observe a direct association between social responsibility disclosure and audit risk. This relationship is confirmed in a sensitivity analysis employing panel methods with random effects as well as generalized least squares. Expanding the disclosure of social responsibility may end in the higher audit risk; hence, audit fees increase. This issue warns users of financial statements, including investors, that attention to not only the positive aspects of social responsibility disclosure in Iran forgetting social responsibility disclosure can be used as a mechanism to conceal poor performance.

http://eprints.bournemouth.ac.uk/35436/

Source: Manual