Effect of Compulsory Rotation of Auditing Institutes on Quality of Financial Reporting

This research has studied effect of compulsory rotation ofauditing institutes on quality of financial reporting in thecompanies listed in Tehran Stock Exchange. Main goal of theresearch was to answer this question that if there wassignificant relationship between compulsory rotation ofauditing institutes and quality of financial reporting. To studyquality of financial reporting, variables of distinction betweendeclared and diagnostic tax, accounting estimations, deviationfrom laws, accounting mistakes and accounting procedureshave been used as dependent variables.Statistical population including two sample groups with 50companies as test group and 50 companies as control groupwas studied for 4 years during 2009-2012. The required data ofthe research includes difference discovery acceptance ratiobefore and after compulsory rotation of auditing institutes.Results of our research showed that rotation of auditinginstitutes had significant relationship with declared anddiagnostic tax distinction and accounting mistakes andincreased differences discovery acceptance ratio. But suchrelationship was not found between rotation of auditinginstitutes and accounting estimates discovery, deviation fromlaws and accounting procedures.

کلیدواژه ها:

rotation of auditing institutes ، yearly adjustment ، quality offinancial reporting