The Role of Internal Audit to Reduce the Effects of Creative Accounting on the Reliability of Financial Statements in the Jordanian Islamic Banks

Jarah, Baker Akram Falah; Jarrah, Mufleh Amin AL; Al-Zaqeba, Murad Ali Ahmad; Al-Jarrah, Mefleh Faisal Mefleh

doi:10.3390/ijfs10030060

Cited by 25 publications

(16 citation statements)

References 37 publications

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“…This study builds on the recommendations of the literature review on earnings management by Walker (2013) who recommended expanding research methods to include qualitative and quantitative methods rather than focusing on archival data. This study complements the results of previous relevant studies that demonstrated the use of EMP in Jordan (Shana'a et al 2023;Alhadab et al 2021;Alzoubi, 2016;Aburisheh et al 2022;Abbadi et al 2016;Matar et al 2017;Jarah et al 2022;Saleem, 2019) by exploring the complementary roles of standard setters, regulators and professional associations in curbing EMP. Therefore, this study aims to provide evidence from developing countries about the phenomenon of earnings management and how it is dealt with by regulators and professional institutes, in contrast to developed countries that have strict regulatory arms in supervising the work of auditors, especially in listed companies.…”

Section: Research Statement and Contributionsupporting

confidence: 82%

Managing Earnings Management: A Framework of Standards, Governance and Ethics

Shbeilat

2024

IBR

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Manipulating earnings to superficially represent financial reports is a flagrant violation of management's assertions about the fairness of financial statements. Therefore, auditors have developed objectives to counter management assertions to ensure that financial reporting is credible and free from earnings management practices (EMP).  This study examines the role of an integrated system of auditing standards and corporate governance surrounded by a framework of ethical values and principles in reducing EMP through the use of a sequential explanatory mixed method. Through this approach, the results obtained from 131 surveys were used as input for the interviews to add a more in-depth understanding of this phenomenon and find fruitful ways to reduce EMP. The results revealed that management's assertion on “accuracy, valuation and allocation” was most involved in EMP, thus, requiring a high degree of exercising professional skepticism. While “objectivity” was the ethical principle most respected by auditors, the results showed that the most serious threat to auditor independence that poses a challenge to the audit profession is the threat of intimidation. Moreover, the study showed that exercising the supervisory role in holding management accountable and following up on the work of auditors to uncover EMP requires real independence of the audit committee from the executive members. The findings have implications for economic policymakers in emerging countries where the sustainability of the audit profession and public companies is critical to economic development and stability. The study provides insights and guidance in mapping corporate governance for the future and benefiting from the experiences of developed countries as outlined in the study’s conclusion.

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Section: Research Statement and Contributionsupporting

confidence: 82%

Managing Earnings Management: A Framework of Standards, Governance and Ethics

Shbeilat

2024

IBR

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“…The findings (Jarah & Iskandar, 2019) demonstrated a substantial link between AIS features and financial performance. A significant between internal audit and supply chain management was found in a study by (Jarah et al, 2022). According to the findings of Al , project risk management arts moderate the influence of project initiation, planning, execution, monitoring and control, closing, and management processes on successful project implementation.…”

Section: Hypothesis Developmentmentioning

confidence: 95%

The effect of reliable data transfer and efficient computer network features in Jordanian banks accounting information systems performance based on hardware and software, database and number of hosts

Jarah¹,

Jarrah²,

Almomani³

et al. 2023

10.5267/j.ijdns

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Reliable data transfer protocols are algorithmic techniques that guarantee the safe and secure transport of data through networks that could experience data loss or corruption. The performance of the systems and some accounting information systems (AIS) will be negatively impacted if the real-time data is not sent. The main factors that affect the performance of computer networks are the number of users, the hardware and software and the bandwidth. The computer network performance will play a role in the performance of the banks as it is an important component of the bank infrastructure. With the advancement of information technology, network technology, and computer technology, computers have been utilized to aid AIS operations, and AIS has become an unavoidable trend of development. Therefore, the purpose of this study was to investigate Data analysis in computer networks to improve AIS performance in Jordanian banks. A questionnaire was used to obtain the information. Jordanian banks account for the bulk of the participants in the survey. A total of 115 people took part in the study. According to the conclusions of this study, communication technology networks have a statistically significant impact on the growth of Jordanian banks' improved AIS performance.

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“…Annual reports are comprehensive sources of information that disclose financial and non-financial aspects of the banks' operations, including CSR-related disclosures. The data for the selected Jordanian Islamic banks from 2010 to 2022 were obtained from their publicly available annual reports on the Amman Stock Exchange (Jarah et al, 2022).…”

Section: Data Collectionmentioning

confidence: 99%

The influence of board of directors’ characteristics on corporate social responsibility disclosures in Jordanian Islamic banks

Al-Zaqeba,

Shubailat,

Abdul Hamid

et al. 2023

Int. j. adv. appl. sci.

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In an era where organizations are increasingly recognizing the paramount importance of addressing societal and environmental concerns, corporate social responsibility (CSR) has emerged as a pivotal facet of contemporary business practices. Within the banking sector, Islamic banks assume a significant role in advocating ethical and socially responsible conduct. This study delves into the impact of the board of directors' characteristics on corporate social responsibility disclosures (CSRD) within Jordanian Islamic banks. Data were meticulously gathered from three Jordanian Islamic banks, all of which are listed on the Amman Stock Exchange (ASE), over the span of the years 2010 to 2022. Our findings illuminate that Jordanian Islamic banks, on average, disclose 47 percent of their CSR endeavors, marking a commendable level of transparency, particularly when contrasted with less developed economies. Notably, independent directors comprise 42% of the board composition, with the average age of board members standing at 41 years. Moreover, 8.10% of board members hold degrees in finance and accounting, while 0.24% possess professional experience within the Big Four accounting firms. On average, Jordanian Islamic banks convene 10.27 board meetings annually, and 48% of directors maintain multiple directorships. Significantly, our analysis underscores that all examined characteristics of board members have a favorable influence on CSR disclosure within Jordanian Islamic banks. This paper constitutes a substantial contribution to the extant literature by providing empirical substantiation of the nexus between the board of directors' characteristics and CSRD in Jordanian Islamic banks, with a specific emphasis on the unique domain of Islamic banking, which has hitherto received limited scholarly attention. Further avenues of research are recommended to explore additional variables and delve deeper into the intricate interplay between board characteristics, external contextual factors, and the disclosure of CSR activities.

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The Role of Internal Audit to Reduce the Effects of Creative Accounting on the Reliability of Financial Statements in the Jordanian Islamic Banks

Cited by 25 publications

References 37 publications

Managing Earnings Management: A Framework of Standards, Governance and Ethics

Managing Earnings Management: A Framework of Standards, Governance and Ethics

The effect of reliable data transfer and efficient computer network features in Jordanian banks accounting information systems performance based on hardware and software, database and number of hosts

The influence of board of directors’ characteristics on corporate social responsibility disclosures in Jordanian Islamic banks

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