Electronic copy available at: http://ssrn.com/abstract=2536343

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Integrity, auditor independence, and the interests of

investors

Mohamad hasan zade

Islamic Azad University Germi

Masumeh amirabadiyan

Islamic Azad University Germi

Abdolali mohseni

Electronic copy available at: http://ssrn.com/abstract=2536343

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Abstract

The present study discusses about the integrity and independence of the auditor,

and the interests of investors, in line with the theoretical foundations. The present

study is a descriptive and applied research. Given the scope of spatial and temporal

study population included all independent auditors, members of Iran's official auditor,

and thus, the sample in this study is 90. To investigate the relationship between the

variables of the study, the integrity and independence of the auditor (independent

variable), and the interests of investors (the dependent variable) were considered, and

the relationship of each of these indicators together, were examined. Thus, two

hypotheses were developed, and the relevant data were collected. SPSS22 software is

used to evaluate hypotheses in this study. Also, this study was to evaluate the

association between variables, including the integrity, independence and interests of

investors, we used one-sample t-test, correlation, and regression eventually.

According to the analysis, the variables and their indicators, we have demonstrated

that there is a positive correlation between the integrity and independence of the

auditor, and the interests of investors. Finally, a detailed presentation of the results

and findings of the study were summarized, and recommendations related to auditors

and experts, and continue pursuing similar research in the future, are provided.

Key words: honesty auditor, auditor independence, the interests of investors

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2.Introduction

The possibility of bad faith in the preparation of these financial statements, the

Board of Directors, led to the need for the audit profession, and people in the name of

the auditor, felt. Audit is the process of collecting regular and impartial assessment of

the evidence, allegations of economic events, in order to determine the validity of the

claim, together with the predefined criteria, and submit a report to Dinfan. The role of

the independent auditor is to show the financial statements have been prepared

according to generally accepted accounting principles, because it can be inferred that

the financial statements have been prepared jointly by the for-profit and independent

auditor. The purpose of the audit of the financial statements, is that auditors can not

comment on that, whether the financial statements have been prepared using the all

important aspects, in accordance with accounting standards, or not (Darabi and Jafari ,

2012).

On the other hand, accounting scandals has been, to clarify questions on ethical

issues related to the auditors, and as a result, their reputation. As a result, public

confidence in the accuracy of the services provided by the auditors is impaired.

What's more, since, audit, specifically relies on trust and strict enforcement

responsibilities, the importance of moral judgment to the profession, is essential.

Major scandal, Arnon, indicated the role of auditors, and led to the adoption of

stronger rules. Therefore, led, strengthening trust, auditors should follow it, to show

of honor, the honor. The criticism increased, because it is not enough to rely on the

accuracy and relevance of financial data, however, the auditor should consider the

broad impact of the audit report, the beneficiaries of the third sector, to maintain

public confidence. When the trust of shareholders, change, restore the trust placed in

priority, because, perceived lack of commitment, which leads to the common good,

and pitting the public's expectations of audit (Redlin, 2013).

In this study, we were looking at it, is the relationship between honesty, auditor

independence, and the interests of investors. It seems the answer to this question can

be effective, responsible and non-responsible for corporate executives, and actual and

potential institutional investors, and independent auditors. Because, with the

knowledge of each of the factors affecting the interests of investors, to facilitate a way

for pre-emptive measures, fraud and non-compliance with ethical principles,

especially for corporate executives and auditors.

Three Reasons to audit

Public accounting, is a professional who provides services to the public, especially

in the field of audit and financial reports submitted by the client. Audit, at first, was

used to meet the needs of users of financial information, such as investors, creditors,

prospective creditors, and government agencies (Boiton et al., 2006). As a

professional, people trust it, it needs to, public accountant, according to the results of

the audit, the accounting scandals that occurred in American corporations, like Arnon

and World Com, destroyed public trust and credibility, and therefore, it also has been

much criticism of the business (Fornen and Clark, 2002).

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But, why do we need to audit? According to Wallace (1980), the need to audit, is a

3-dimensional object: it is defined as an activity, as a regulatory mechanism,

eliminating the need for information to be obtained, from investors to improve their

decision making, and to act as a guarantee, the major distortions. Pentland (2000),

defines the necessary items needed to audit as a control mechanism, which is

important, more than ever, need to audit during the 21st century, as a control

mechanism, to face the world financial crises and scandals led to requests for more

regulation, and regulation of companies will rise. Auditing can be regarded as a

strategic function of the company, with the aim of ensuring the issued financial

statements to shareholders, and enhance the credibility of the subject of auditing

(Power, 1999).

Clues in the big scandals, the audit are often blamed, which in the end, this leads to,

stricter regulations, with the aim of enhancing audit quality. Regulations, audit and

accounting services (eg, IFRS & ISA), have tended to produce the upward pressure on

pricing audit, and the increasing complexity of the audit (Kim Liu and Zhang, 2012).

Also, it has been argued that increased regulation could affect the price of the items

audit services company. Research results show that, the customers, the additional

costs (or vice versa), previously introduced, the Audit compensation and total

compensation next year, after the introduction of a lower (higher). These findings

show that the disclosure of the audit fee had a positive effect on the accuracy of

pricing audit (Ask and Holm, 2013). In general, three main hypotheses proposed, to

require an audit (Lem, 1998). These three hypotheses are:

2.1 Representation theories

this hypothesis refers to the role of auditing plays a role in reducing the problems

and risks undermining the morals. According to agency theory, the auditor is, in the

context of the relationship between the agents - the owner, an integral part of the

contract mechanism, which is created for the control and supervision of the director of

the agency costs. According to Jensen and Mac Ling (1976), the representative (s), is

about the internal operations of the company, the owner, assuming the manager, is

looking for self-interest, and has been used, the company supplies more than

desirable, and tries to transfer wealth from owners, to win. According to this theory,

the organizations, information asymmetry is higher, the auditor needs to be more

work and effort. According to Wallace (1987), the closest concept to asymmetric

information, the terms of complexity, that most benchmarks, researchers have used to

measure it, is a subsidiary of the same address. Auditing Standard 53 America states:

"The organization that operated without adequate oversight of its operations, and

decentralized, will have a very high risk." In fact, the risk of ignoring ethics, seen,

more decentralized units (Rajabi et al., 2008).

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2.2 Hypothesis trust

based on the assumption of trust, auditor, helps to decrease the wrong decisions in

the capital market, the investor tries to choose a reputable auditor, to show to the

capital market, the operation is transparent and appropriate. Potential investors also

take advantage of these features for your investment decisions. There are similar

criticisms, the representation theory. Justify this hypothesis, the pricing of audit

services, which is so large and reputable audit firm, they demand from their

employers, higher fees, because such institutions, are of high quality and reliability,

with investors and society, and as a result, they bring transparency and performance

more suitable for the company (Nikbakht and Tanani, 2010).

Hypothesis 2.3 Accreditation

Accreditation is based on the assumption that the ratio of the two previous

hypotheses, little attention has been, researchers and theoreticians, may audit

profession, it is claimed, there is no liability for the validity of the results and the

financial statements, but in on the other hand, investors believe that, if the loss is

entered as a result of misleading financial statements, auditors, it must pay the

penalty, and compensate for their losses. Therefore, it is possible, in some cases, the

harm to investors, auditors, are held accountable. As a result, the auditor should not

consider the risk in pricing their services, and the results of operations of the

company, is weaker (lower profitability or losses of tens of) the risk increases,

consequently, the audit fees, increases. In practice, a combination of the assumptions

used, in accordance with the terms of the cultural and legal environment, and in a

country, this may be one of them, offer a better explanation than others. But the

hypothesis representing the interests of the audit, the meet director, and therefore, a

director, to the extent that it considers itself accountable, responsible for his (or he is

forced to respond) is present, the fees for audit services. This aspect, that is, the aspect

of the demand for audit services, has received little attention, and often, researchers

have found that research in the field of audit fees, review, and audit of its services. It

seems, one of the main reasons it is difficult to measure and quantify the

responsibility to meet director (Lem, 1998).

4. The auditor's role in the market and their legitimacy

Given the current business environment, and conflicts of interests between owners

and users of information, there is a tool to ensure the preparation and presentation of

information is essential to the cause of improving data quality. To this end, audit, of

the tools, review, information provided, based on pre-defined criteria, and offers the

results of their work, in the form of reports, which use data, benefit from it, to have a

wiser decision. A very important task, the assessment of economic and financial

information, in different countries, it is assigned to, and independent auditing.

Independent auditors, do it, with comments on the financial information, in the form

of audit reports. Presentation comment on the specific, generally, the concept is clear,

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largely, to all users, including investors. Therefore, the audit report, is indicative of

risk information (claims conformity with reality). Audit report, as the end product of

the audit, the general nature of the product (service), which means it does not preclude

the use of other public services, and it is monopolized by any one user. Public goods,

like other goods and services, must be of good quality, the demand for it, is

continuing. If auditing is a monitoring device, which is responsible, mentioned several

roles, so assuming all other things equal, the financial statements, which have been

audited high quality, will have a greater ability to rely on and trust users of this

service (Gholami et al., 2013).

In total, the auditor's role in society is to provide guarantees for third sector

stakeholders, to express, company reports and financial statements are fairly reflect

the true performance of the company. In order to perform this role, it is essential that

the independent auditors, the attending companies (Lavin, 1977). If the owners of the

organization, they have doubts about the independence of auditors, the financial

statements, are valid, something that leads to the sudden departure of capital and

interest, is suspected of businesses (ABI, 2002). However, the dependence is at the

heart of the auditing profession, the issue of auditor independence, can go back to the

nineteenth century (Chandler and Awards, 1996). Since then, accounting profession

particularly that of the standard system, it is necessary to eliminate the conflict, and to

ensure the independence of auditors. In Great Britain, concerns about auditor

independence, is the result of corporate scandals and the decline in 1980 and 1990.

These scandals, provoked, academic appeal, the issue of auditor independence, and

caused changes in the structure and legislative declaration (Dart, 2011).

5. Variables

5-1-Auditor independence meters

Independence is the essence and spirit of the audit and non-audit independence, has

no value or meaning. Independence, in Webster (1986), defined as the freedom of

others or other effects, check, or will. In this section, we refer to the various

definitions offered by independent auditors, in several studies, and by different

authors:

- De Angelo (1981) says, an auditor, independent, able to publish a report on their

audit, in accordance with his or her true opinion;

- Knapp (1985), considers the independence, ability, strength, pressure against the

owner;

- Carrie (1976) argues, independence, in the simplest sense, is that the auditor, to tell

the truth, as we have seen, and let no stimulus, whether physical or emotional,

removing him from the path;

- Magi and Tseng (1990), that, if there is no independence, auditor's judgment, would

not be consistent with the faith, the reporting policies of the owner;

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- Lee Interview (1998) considers independence, the absence of collusion between the

auditor and management of the company owner. International Federation of

Accountants (2001), Independence, has two dimensions. The apparent independence

(independent auditor to look), and the autonomy of (the auditor is independent, in

fact);

- Defined by the AICPA (1985), the Association of Chartered Accountants in England

and Wales (1995), the Association of Chartered Accountants of Canada (2000), the

Association of Independent Auditors Australia (2001), and the Society of

Management Accountants, UK (2001) on the independence, similar the definition of

the International Federation of accountants, the securities and Exchange Commission,

New York, knows independence, mental state, neutrality and impartiality, the two

aspects of internal and external independence;

- Doruse and Nidels (1985), comparing their independence, in eleven countries,

France, the Netherlands, Switzerland, the UK, Germany, Jordan, Kuwait, Canada,

Mexico, the US, and Japan, and came to the conclusion that, with the exception of

Switzerland, other countries, seriously, the appearance of independence, and the

independence of the internal auditor;

- Hall and Renner (1991), argue, though, the inner aspect of independence is not

visible, but when, negligence and negligence of the auditor, appears to be evidence of

a lack of independence of internal obtained (Sajjadi and Ebrahimimand , 2005).

Sosenov (2013), is of the opinion that the auditing profession, independent attitude

measures should be separated from the service, the owner of the work. In this

connection, the independence of the auditor, is the meaning of independence to the

information provided by the owner. Auditor independence, the principle is the attitude

of mind, which is characterized by individual approach, the integrity and objectivity

professional duties. Bartlett (1993), declared the independence of the auditor, as an

attitude of mind, which does not show itself unwilling to any position in the audited

financial report. From different perspectives, which are mentioned above, can be

understood that the independence of the auditor, the absolute approach, which should

be protected and owned by the auditor, independence, according to maintain

appropriate behavior at work, and so Thus, the independence of maintaining its image

as a group, supporting the community's trust. Public accountants, who are doing their

audit activities, should do their independence, while maintaining the integrity and

impartiality in carrying out professional responsibilities (Ahrens, 2012).

5-2 honesty auditor

The concept of integrity, ideally, is defined as a good character, and also takes it,

not fear it. Honesty, causes the different ethical positive behaviors seen in humans,

while the lack of this option will make everyone, commit, numerous errors. In

addition, the word integrity, constitute the major part of the mission statement of the

values of an organization, which is often referred to, professional codes of ethics,

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code, run, or even emphasized that, advertising agencies. For many people, honest is

much more important than money, and easily understandable that people's moral

values, affects, financial decisions (Becker, 2009). Two prominent ethicists

businesses, Robert Solomon (1999), and Richard George (1993), developed the

concept of virtue (such as honesty), an overlooked component for business ethics.

Acting with integrity is in accordance with the regulations, the approach because it

involves behavior that is higher than the minimum morality. Spirit approach to

compliance with laws, is to see how close to the minimum of ethics, (often legal

restrictions, count), a person can go through it, but, honestly, it is necessary to decide

on what extent, a person must be higher than the minimum, in certain situations.

Honesty is different from the approach in accordance with the regulations, in another

way, because the norms that the person does not comply, it is self-imposed, rather, it

is applied by the external sector (including law enforcement) (James c. Ga, 2013).

5.3 Benefits Investors

However, there has been little discussion outside the scope of regulation of

securities markets, the protection of the interests of other investment management is a

key issue in many years. Arthur Levitt, Chairman of the Securities and Exchange

Commission, sees the need for the protection of investors, in the late 17th century,

when the official stock exchanges, for the first time, in England, was recognized. A

few years later, the South Seas bubble, which in early 1710 was a huge financial

fraud, proves this. The scandal was very widespread and damaging, because it makes

the end joint stock form of organization of business (which was the forerunner of

modern companies) over one hundred years, finally, the need for access to huge

amounts of capital, for shipping companies, caused by the emergence of corporate

form of organization in England with company Law of 1844 and 1845. However, the

law requires the audit of the balance sheet, in order to limit the ability of management

to commit fraud (James C. Ga, 2013).

6. Literature Background

Nikbakht and Mehrbani (2006), who studied the effect of non-audit services and

the fees of the audit firm, on auditor independence. The results of this study showed,

providing design and implementation of information systems, and HR services

(recruitment of executive staff), from the perspective of accountants, creditors, and

investment managers, undermined the independence of the auditor, and the views of

managers investors and creditors, to the merger or acquisition, can be altered to

auditor independence, and voice services, brought about a kind of shareholders, and

tax advice, from the perspective of creditors, violates auditor independence, which in

turn, the analysis of all data collected in connection with this hypothesis, suggests that

non-audit services, the total does not violate the independence of auditors.

Gholami, Najaflou and Zangiabadi (2013), examined the extent of the audit report

to investors, in exchange, they pointed out, audit report, can be considered as an

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approval stamp, in terms of investment, that is, Accreditation to the financial

statements, and it is effective investment decisions. Moreover, those who are familiar

enough with the audit report, believe that the audit report, providing information

efficiently and reliably, to the financial statements. Furthermore, the findings indicate

that there is a significant relationship between gender, education level, field of study,

and the record of scholarship, with the use of audit reports.

Bagherpour & Lashani, Saee, Moshkani, Bagheri (2012), the study predicts the

independent audit report, Iran: a data mining approach. To predict the network, the

independent auditor's report, the three classification techniques include data mining;

decision trees, neural networks, and logistic regression were used. The results show

that the average accuracy of decision tree technique to correctly classify audit reports,

the higher is the technique of artificial neural networks and logistic regression.

Kamali Kermani, Talebi, Ansari (2013), who studied the effect of conducting audits

and non accounting services, academics and analysts' views on the possibility of

exchange. They were of the opinion that the lack of proper positioning of the external

auditors, the audit report led to the fundamental criticisms of the auditing profession

in the world (to protect the interests of shareholders and stakeholders). In this context,

auditors should not only be truly independent, but must be independent to come in

and accredited handle on the financial statements.

Dart (2011) examined the perceptions of investors from Great Britain, the auditor

independence. The results of this study indicated the confidence of investors in the

financial statements provided by companies. The majority of the investment is of the

opinion that the investment they are maintained by the ethical standards of auditors.

Also, the results of nonparametric tests showed that there is no distinction between

gender and perceptions of auditor independence, but the ones that did not have

accounting records, and private investors, had more concerns about auditor

independence.

Sosenso (2013), a review of the literature on the impact of independence, and the

General Accounting Office, the audit quality, and its impact on the reputation of the

Audit Office. In this study, the independence shown by the indicator, the integrity,

and the goal is for the General Accounting Office, and researchers are analyzing it,

with three parameters: the number of branches, number of partners International, and

so on, the ownership of audit staff. He said efforts to maintain and improve audit

quality, is one of the key factors in maintaining stability in public accounting.

Business can be strengthened through the implementation of an independent approach

to the audit, the General Accounting Office, the General Accounting Office and

reputation.

Redlin (2013), reviews audit ethics, and its impact on public confidence. The

results suggest that the increased efforts of Auditors, show little public confidence.

Also, increased regulation, and so on, communications between the auditor and the

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legislative body may have a positive impact on public confidence. Consequently,

more attention to ethical issues stems from greater attention to quality.

Chen and colleagues (2013) examined the effect of reducing fraud auditors, the

Chinese company, which is known to lack of legal stimulants, low support from

investors, with strict controls on trade and media units, this field. In this study, they

were in search of investigating the matter, that the auditors, help to reduce fraud

companies in China or not. Because, in the past decade, a wave of corporate scandals

and fraud, are offended, investor confidence, and have led to increased volatility in

financial markets in many countries. They finally announced that, corporate fraud; it

can reduce the confidence of foreign investors and capital market stability, which, in

turn, sought to decrease the development of emerging countries.

James C. Ga (2013) examined the integrity, independence of the auditor, and the

protection of investors. He said, lays in the basic principle of public securities markets

in many countries, is that the interests of investors, should be provided. It is thought,

independence of the work (ie, the management of the work), will likely keep interest

investors more than auditors. He said, if it is important that auditors act with integrity,

so it seems that it is necessary to change the institutional structure of professional

practice. Improvements in accounting, ethical standards, such as those offered by

Brilof (1990), it may be necessary or not necessary. But obviously, it was not enough.

7. Research Method

7.1 Methodology

Overall, though, if we consider, classified research, according to the study, is the

practical, if, classify types of research is planned based on the nature and methods of

the present study, the nature of, is descriptive and non experimental (field survey),

and the method also, it is considered, correlation studies. Meanwhile, the process of

this investigation is the operation of the library and field research as an integral

component.

7.2 hypotheses

7-2-1- The main hypothesis

- There is a significant relationship between honesty, auditor independence, and the

interests of investors.

7-2-2- subsidiary hypothesis

- There is a significant relationship between auditor honesty, and the interests of

investors.

- There is a significant relationship between the independent auditor and the interests

of investors.

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8.3 The sample

The research, are all independent auditors, members of the Iranian Association of

Certified Public Accountants. Sampling is random, and the sample size, to be

determined by this method. In addition to this, the sample in this study, given the size

of the population, including 90 women, to estimate the number of samples, according

to the scale variables hypothesis of this study, we use the following equation:

Z1 = 95% confidence level

N = population size

d = sampling error

σ1 = population Variance

The study, to be sure, 10 percent more than the estimated sample size was selected,

after the elimination of incomplete questionnaires, and redundant data, the number

has risen to 90 scales.

8-4- collection and data analysis

In this study, after determining the primary and secondary hypotheses of the study,

according to the variables of the study, completed a questionnaire designed to collect

data and test hypotheses. Thus, measuring the survey questionnaire, carefully and

refer to books, as well as interviews after consultation with the advice and

clarification of questions, and supervisors of its reforms After final approval,

reproduced, and distributed among the people, therefore, we can say that, gauges, this

study is a good narrative. Other reliability or reliability of the measurement is

calculated using Cronbach's alpha, which is as follows:

Table 1), Cronbach's alpha for each variable

Row Index Reliability

coefficient

1 Auditor independence .885

2 Integrity Auditor .845

3 Interests of investors .848

4 The reliability index .863

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9. Analysis of Data

9-1- distribution of the independent variables

Table 2), the gender distribution of the sample

Frequency Percentage cumulative

frequency

Male 79 87.8 87.8

Female 11 12.2 100.0

Total 90 100.0 cumulative

frequency

Table 3) educational level sample

Frequenc

y

Percentag

e

cumulative

frequency

BA and lower 56 62.2 62.2

MA 31 34.4 96.7

PHD and higher 3 3.3 100.0

Total 90 100.0

Table 4), the age distribution of the sample

Frequen

cy

Percenta

ge

cumulative frequency

Under 25 years 7 7.8 7.8

25-34 years 22 24.4 32.2

35-44 years 38 42.2 74.4

Over 45 years 23 25.6 100.0

Total 90 100.0

Table 5) distribution of sample work experience

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Frequency Percentage cumulative

frequency

Under 10 years 35 38.9 38.9

10-20Sal 30 33.3 72.2

Over 20 years 25 27.8 100.0

Total 90 100.0

9-2- test hypotheses

First hypothesis: there is a significant relationship between auditor honesty, and the

interests of investors.

H0: There is no significant relationship between the auditor and the interests of the

investors' trust.

H1: There is a significant relationship between the integrity of the auditor, and the

interests of investors.

Table 6) Pearson correlation coefficients for the first hypothesis

Pattern Number of

Views

Pearson Significance

level

The first

hypothesis 90 .448 .000

Because, as the level of significance, the Pearson correlation coefficient is less than

0.01, therefore, there is reason enough to reject the hypothesis at the 0.01 percent

level. Also, the Pearson correlation coefficient, 0.448 indicates the number of positive

impact the integrity of the auditor, the interests of investors.

The second hypothesis: there is a significant relationship between auditor

independence, and the interests of investors.

Ho: There is no significant relationship between the independent auditor, and the

interests of investors.

H1: There is a significant relationship between the independent auditor, and the

interests of investors.

Table 7), the Pearson correlation coefficient for the second hypothesis

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Pattern Number of

Views

Pearson Significance

level

The second

hypothesis 90 .352 .001

Because, as the level of significance, the Pearson correlation coefficient is less than

0.01, therefore, there is sufficient reason to reject the hypothesis H0, at 0.01 percent.

Also, the Pearson correlation coefficient, 0.352 to figure demonstrates the positive

impact the integrity of the auditor, the interests of investors.

But in general, obtained with the Pearson correlation coefficients, we can say that

the end result is that in this case:

Table 8) Pearson correlation coefficients for variables

Pattern Number of

Views

Pearson Significance

level

Auditor Honesty 90 .448 0.000

Auditor

independence 90 .352 0.001

According to coefficients presented in Table (8), it seems, there is a higher correlation

between auditor Honesty and interests of investors, compared with auditor

independence, and the interests of investors. In addition, the table (4-8), multiple

linear regressions, shows, derived factor-beta, for Honesty, independence is higher,

and it shows the importance Honesty, the interests of investors.

Table 4-8) Multiple Regression Result

Model

Beta Sig.

(Fixed) .000

Honesty .713 .000

Independence .341 .001

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10. Conclusions and proposal

In sum, it seems the main reasons for this, it is that, in general culture and norms,

honesty can be a deterrent for auditor independence. Fact, it can be present in

discussions and other areas. Today, more attention to ethical issues, such as honesty

and integrity, is a central issue of the human sciences, in many areas. In general,

measures in accordance with ethical principles, compared with only in accordance

with certain rules, can be of assistance, in the interests of investors. Therefore,

auditors can be encouraged to do honest work. On the other hand, auditors have a

duty to look at the community as a whole, and not just investors. Audit, to be

considered, such as a job and so, self-regulation placed as part of a social contract

between business and society, to their mutual benefit. The results of our study showed

that there is a significant relationship between auditor independence and integrity, and

the interests of investors. In the meantime, the correlation coefficient greater openness

variable, we can say, honestly, is a more important factor than the interests of

investors. In this connection, Hassas Yeganeh (2012), in their study, declared that the

conflict of interest between owner and manager, affects the use of the independent

auditors' report, for making public enterprises, public institutions, and banks.

Barzideh and Kheirollahi (2011), were of the opinion that, in the face of Auditors, the

evidence is inconsistent with the findings of the audit process, accountability, audit

work performed, and the pressure led to concerns, the lost reputation, and

concealment of evidence, the auditor is likely to increase.

Newman (2009) believes the disclosure of information, and information provided

by other analysts, and the integrity, influence on the decisions of financial analysts.

Dass and Pandit (2010), evaluated the effectiveness of audit quality, and efficiency of

investment, announced, audit quality, and reduce inconsistent information, which

prevents investment. James C. Ga, (2013) stated, the integrity and independence of

the auditor, is a major factor in the interests of investors. He argued that, investor

protection requires that auditors, have integrity, or proper conduct themselves. Redlin

(2013) also believed that auditors should consider the social and public duty, to

increase the value. As a result, better morals, the answer may be, to win back public

confidence in the accounting profession. Chen et al (2013) also found that,

companies, executives, they were less honest, have done more manipulation, profit,

and further legal action; do not show the company fraud.

11 comments

- It is recommended that the certified public accountants, through the appropriate

legal framework, and show greater sensitivity towards meeting the independence of

statutory auditors;

- It is recommended that the certified public accountants, to improve the quality of

audit reports, promote and ensure the community's expectations of audit work

product;

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- Recommended to the directors and officers of the Tehran Stock Exchange, to find

ways to take action, in order to reduce information asymmetry and improve

investment, and greater supervision over the quality of audit reports;

- It is recommended to auditors, to act carefully and delicately, in reviewing financial

reports, and avoid the presentation of the reports, which leads to the loss of investor

confidence;

- Recommended, the audit, accounting and auditing standards as trustee in Iran,

according to the findings of this study, special attention to the importance of factors

influencing auditor independence, and take action in this regard, and designed

auditing standards;

- Another proposal of this study is to entities that perform professional services audit.

As you can see, the independence and integrity of the audit, has a special effect on the

interests of investors. Audit Office, members of the Iranian Association of Certified

Public Accountants, and the GAO, which are accounted for, various government

agencies, corporations, and private enterprises should pay more attention to these

factors, to evaluate the effects of these variables on the distortion the audited financial

statements.

- It is recommended to investors in the stock market; they have more interest in the

audit reports, and consider the integrity and independence of auditors, as possible.

12. Limitations of the study

Although the present study, both theoretically and practically, are useful, but there

are limitations. First, the questionnaires filled by people who are eager to fill it.

Second, the questionnaire method, there is no problem for investigators, lack of

control over the decisions of those polled, the provision of or failure to provide a

response. Finally, this study found a higher concentration, the customer experience,

and previous knowledge of them, instead of anticipating and identifying future.

Questions are in connection with their current experience. However, it should be

noted not only the past and present factors must also be examined, other factors that

could potentially affect the variables in the future.

17

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