Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee
Objective: Today, in the audit profession, identifying the factors affecting audit fee is of particular importance in terms of its impact on the quality of auditing and on the competitiveness of audit firms. The aim of this study is to examine the versatility of digits distribution of financial stat...
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| Format: | Article |
| Language: | fas |
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Shahid Bahonar University of Kerman
2020-04-01
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| Series: | مجله دانش حسابداری |
| Subjects: | |
| Online Access: | https://jak.uk.ac.ir/article_2511_f0d657896204468e2a81ceb9834785b0.pdf |
| _version_ | 1818858587956445184 |
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| author | Mohammad Hossein Safarzadeh (Ph.D) Hossein Rezaei Namavar |
| author_facet | Mohammad Hossein Safarzadeh (Ph.D) Hossein Rezaei Namavar |
| author_sort | Mohammad Hossein Safarzadeh (Ph.D) |
| collection | DOAJ |
| description | Objective: Today, in the audit profession, identifying the factors affecting audit fee is of particular importance in terms of its impact on the quality of auditing and on the competitiveness of audit firms. The aim of this study is to examine the versatility of digits distribution of financial statements with Benford’s law and its effect on audit fee. Method: To measure the variance of distribution of financial statement digits with Benford law, the scoring practice by Kolmogorov-Smirnov method was used. In this study, the data of 101 companies lidted in the Tehran Stock Exchange, TSE, in the period 2007 to 2017 were collected from Rahavard Novin software, financial statements and the official website of TSE. The research hypotheses were tested by multivariate regression model. Results: Findings showed that the score distribution of the initial digits of financial statements has a positive but non-significant effect on audit fee. Also, for the distribution of last digits of financial statements, a negative but non-significant effect on the audit fee was observred. In other words, the deviation from Benford distribution for the first and last digits of financial statements lacks positive and significant effect on audit Fee. Conclusion: Based on Banford law, auditors can limit the distribution of their investigation to the transactions that are suspicious and more likely to be fraudulent. Therefore, auditors can be more accurate in their estimates of the importance of distortion in audit program and audit pricing. |
| first_indexed | 2024-12-19T08:58:40Z |
| format | Article |
| id | doaj.art-310dbbb62d49429fadc5d1e179e63467 |
| institution | Directory Open Access Journal |
| issn | 2008-8914 2476-292X |
| language | fas |
| last_indexed | 2024-12-19T08:58:40Z |
| publishDate | 2020-04-01 |
| publisher | Shahid Bahonar University of Kerman |
| record_format | Article |
| series | مجله دانش حسابداری |
| spelling | doaj.art-310dbbb62d49429fadc5d1e179e634672022-12-21T20:28:31ZfasShahid Bahonar University of Kermanمجله دانش حسابداری2008-89142476-292X2020-04-01111618310.22103/jak.2020.13192.28652511Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit FeeMohammad Hossein Safarzadeh (Ph.D)0Hossein Rezaei Namavar1Assistant Professor of Accounting, Shahid Beheshti University, Tehran, Iran.M.A. of Accounting, Shahid Beheshti University, Tehran, Iran.Objective: Today, in the audit profession, identifying the factors affecting audit fee is of particular importance in terms of its impact on the quality of auditing and on the competitiveness of audit firms. The aim of this study is to examine the versatility of digits distribution of financial statements with Benford’s law and its effect on audit fee. Method: To measure the variance of distribution of financial statement digits with Benford law, the scoring practice by Kolmogorov-Smirnov method was used. In this study, the data of 101 companies lidted in the Tehran Stock Exchange, TSE, in the period 2007 to 2017 were collected from Rahavard Novin software, financial statements and the official website of TSE. The research hypotheses were tested by multivariate regression model. Results: Findings showed that the score distribution of the initial digits of financial statements has a positive but non-significant effect on audit fee. Also, for the distribution of last digits of financial statements, a negative but non-significant effect on the audit fee was observred. In other words, the deviation from Benford distribution for the first and last digits of financial statements lacks positive and significant effect on audit Fee. Conclusion: Based on Banford law, auditors can limit the distribution of their investigation to the transactions that are suspicious and more likely to be fraudulent. Therefore, auditors can be more accurate in their estimates of the importance of distortion in audit program and audit pricing.https://jak.uk.ac.ir/article_2511_f0d657896204468e2a81ceb9834785b0.pdfdistribution of financial statementsbenford’s lawaudit fee |
| spellingShingle | Mohammad Hossein Safarzadeh (Ph.D) Hossein Rezaei Namavar Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee مجله دانش حسابداری distribution of financial statements benford’s law audit fee |
| title | Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee |
| title_full | Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee |
| title_fullStr | Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee |
| title_full_unstemmed | Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee |
| title_short | Versatility of Digits Distribution of Financial Statements with Benford’s Law and Its Impact on Audit Fee |
| title_sort | versatility of digits distribution of financial statements with benford s law and its impact on audit fee |
| topic | distribution of financial statements benford’s law audit fee |
| url | https://jak.uk.ac.ir/article_2511_f0d657896204468e2a81ceb9834785b0.pdf |
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