A Study of the Role of Social and Professional Ties of Audit Committee with the Assessment of Firm Fraudulent Reporting

Abstract

Objective: This research study the role of social and professional ties of audit committee in assessment of the firm fraudulent reporting. Methods: The study is an applied-type survey. A questionnaire and simple random sampling of 102 members of Audit Committee of the Tehran Stock Exchange in 2017 were carried out. To analyze the findings Structural Equation Method was used. Results: The findings of the study show that there is a negative and significant relationship between social and professional relations of the members of the audit committee with senior executives and actions of members of audit committee to evaluate the fraudulent financial reporting risk. Also, there is a positive and significant relationship between the social and professional relations of the members of the audit committee with other managers and the audit committee's efforts to assess the fraudulent financial reporting risk. Conclusion: These findings show how the level of social and professional ties between members of the Audit Committee and managers can be effective in an assessment of the firm fraudulent reporting.

Keywords

• Assessment of the firm fraudulent reporting
• Audit committee
• Professional ties
• Social ties