Identifying and measuring information content of financial statements in audit reporting adjustment

Bakhshi, Ali; Yazdani, Shohreh; Khanmohammadi, Mohammadhamed; Maleki, Ali

doi:10.22075/ijnaa.2022.28592.3934

Identifying and measuring information content of financial statements in audit reporting adjustment

Document Type : Research Paper

Authors

Ali Bakhshi ¹

Shohreh Yazdani ¹

Mohammadhamed Khanmohammadi ¹

Ali Maleki ²

¹ Department of Accounting, Damavand Branch, Islamic Azad University, Damavand, Iran

² Department of Statistics, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran

10.22075/ijnaa.2022.28592.3934

Abstract

Making economic decisions and allocating resources optimally without the presence of valid and reliable data is not possible. Capital flows towards superior economic activities when capitalist decisions rely on timely, relevant and reliable information. In this regard, auditing plays a vital role in determining the validity of information; in other words, given the accountability requiring the presence of valid and reliable data, it can be stated that auditing is one of the fundamental accountability processes. In the current research, an optimum prediction method for independent auditor's report types is selected and two approaches of the J48 algorithm and random forest are compared. This research has been conducted on 84 corporates during 2008-2017. In order to train, test and investigate the research variables, Weka software was used. The dependent variable is the auditor's report type. Results indicated that the accuracy of the J48 algorithm has been 72.61% and 60.42% in training and test sections, respectively and the accuracy of the random forest has been 94.57% and 63.09% in training and test sections, respectively; so, the random forest model is more effective.

Keywords

Auditor's report type

J48 algorithm

random forest

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