Limitations of Performance Auditing Reports Insertion In Iran s Budget Liquidation Report

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1 International Research Journal of Applied and Basic Sciences 2013 Available online at ISSN X / Vol, 6 (1): Science Explorer Publications Limitations of Performance Auditing Reports Insertion In Iran s Budget Liquidation Report Hossein Shahhidaripour *1, Abdolmahdi Ansari 2, Ahmad khodamipour 3 *1. M.A. Accounting of Science and Research branch, Islamic Azad University, Kerman, Iran 2. Associate professor of Accounting Science and Research branch, Islamic Azad University, Kerman, Iran 3. Associate professor of Accounting Science and Research branch, Islamic Azad University, Kerman, Iran Corresponding Author Shahhidary@mailfa.com ABSTRACT: The aim of this study is to identify the major constraints of inserting performance auditing reports in Iran s budget liquidation report. To achieve this goal the scholar has designed a questionnaire based on five-point Likert scale, and has distributed the questionnaire between members of the statistical population including auditors and experts of Supreme Audit Court, who has been chosen according to random sampling. The questionnaire is focused on polling about factors which hinder the insertion of performance auditing reports in budget liquidation report. For hypothesis testing, the chi-square (χ2) test has been used. The result of survey with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report is limited by factors such as lack of proper legal infrastructures, lack of proper reporting frameworks, lack of accounting and auditing standards, not state budgeting based on performance, and not reporting based on performance. Key words: Performance Auditing, Budget Liquidation Report, Supreme Audit Court INTRODUCTION In recent years, performance audit has been the center of attention due to the inability of financial audit to fully meet the requirements for management systems. (RahmaniFazli and Sadeghi, 2012) Development and implementation of performance audit on the audit of the country's economic development plays an important role, to achieve the required fields for the economic development of the audits provided (Joypa, 2010) Necessary financial oversight in the public sector is undeniable, but it seems not enough. It has been observed that in some cases the costs of government programs, laws and regulations are carried out, but results are not consistent with what is expected in programs or resources but the cost is not the result. For example, if all the expenses are fixed rates and subsidies. But how was this victory? And what goals to pursue and how much it costs to do to achieve that goal? The answer to any of these questions did not specifically (Abdullahi, 2001). The use of performance auditing is widespread across the public sector in many countries. Similar to other forms of auditing, performance auditing implies that an independent body conducts an investigation in order to make a formal assessment of an organization (Everett, 2003). The findings from this investigation are used to draw up an audit report, which can be used by parties within or outside the organization to hold politicians or managers accountable (Glynn, 1996). And given that the Iran s Supreme Audit Court of Audit has started in (2009). And it is growing. Study to identify the impact of some of the most important limitations include the lack of proper legal infrastructures, lack of proper reporting frameworks, lack of accounting and auditing standards, not state budgeting based on performance, and not reporting based on performance., the reports insert the performance audit report on the Budget Liquidation Report and the Supreme Audit Court to answer the main research question of the performance audit reports for inclusion in the report of the Budget Liquidation Report, to what extent is limited. MATERIALS AND METHODS This study is a survey research. For data collection, 340 scholar-made questionnaires have been distributed between auditors and experts of Supreme Audit Court. For hypothesis testing the chi-square (χ 2 ) test have been used. Finally, the data collected by SPSS software used analyzed and the results were discussed.

2 DESCRIBE STATISTICAL METHODS For both the goodness of t test and the test of independence, the chi square statistic is the same. For both of these tests, all the categories into which the data have been divided are used. The data obtained from the sample are referred to as the observed numbers of cases. These are the frequencies of occurrence for each category into which the data have been grouped. In the chi square tests, the null hypothesis makes a statement concerning how many cases are to be expected in each category if this hypothesis is correct. The chi square test is based on the di erence between the observed and the expected values for each category. The chi square statistic is de ned as ( 2 Fe i - Fo i Σ ( χ 2 = Fe i Where Oi is the observed number of cases in category i, and Ei is the expected number of cases in category i. This chi square statistic is obtained by calculating the di erence between the observed number of cases and the expected number of cases in each category. This di erence is squared and divided by the expected number of cases in that category. These values are then added for all the categories, and the total is referred to as the chi squared value. Chi Square Calculation: Each entry in the summation can be referred to as \The observed minus the expected, squared and divided by the expected." The chi square value for the test as a whole is \The sum of the observed minus the expected, squared and divided by the expected." The null hypothesis is a particular claim concerning how the data is distributed. More will be said about the construction of the null hypothesis later. The null and alternative hypotheses for each chi square test can be stated as H 0 : H 1 : Oi = Ei Oi Ei If the claim made in the null hypothesis is true, the observed and the expected values are close to each other and Oi Ei is small for each category. When the observed data does not conform to what has been expected on the basis of the null hypothesis, the di erence between the observed and expected values, Oi Ei, is large. The chi square statistic is thus small when the null hypothesis is true and large when the null hypothesis is not true Previous studies (history and literature) In general concerning audit performance, much research has been done, but some of them can be expressed as follows: Research by Rahmani Fazli and Sadeghi, (2012) as "Performance audit and Its relation with geographical studies(a Case study of the Environmental Crisis in Uremia Lake)" The results show that, In recent years, performance audits, financial audits due to the inability to completely accountability the needs of management systems is been considered. Performance audit of strengths and weaknesses in terms of performance management, efficiency, effectiveness and economy are detect, Performance audit can provide some suggestions to resolve weak points and a more favorable assessment of the measures and processes have been performed. Research by Joypa (2010) as "The Problems of Conducting performance audit by the Supreme Audit Court and Suggestions for Improvement" The results show that, The following factors in order of importance, performance audit by the Supreme Audit Court does hindered the implementation. These factors are: Lack of education and skills necessary and sufficient Supreme Audit Court of Auditors, Improper budgeting system, Lack of appropriate criteria for evaluating administrative units performance, The lack of transparency accountability to the executive management of Supreme Audit Court of Auditors, Improper system for collecting and maintaining financial and operational data and The lack of legal authority (the Supreme Audit Court of Law) for doing performance audits. Research by Kiaye (2010) as "Operational audit and performance audit, similar to the components, approaches and different goals" The results show that, performance and operational audit are robust tool for evaluating the operation of organizations in the public and private sectors and operational audit tool to improve operations and performance audit as a tool to improve the accountability of services is recognized accreditation. In relation to the Budget Liquidation Report, many researchers have been reported; some of them can be expressed as follows: In research by Mansourian and Agah, (2010) as "The Supreme Audit Court of Iran and French legal systems (comparative study)," The results show that, Budget Liquidation report is Parliament monitoring of the budget as the final been expressed, As well as check that the Islamic Consultative Assembly is doing its directly into the Supreme Audit Court, judicial executions in charge of overseeing the budget, the Budget Liquidation report is the culmination of the compilation report. 18

3 The research by Danshfrd and Qizilbash, (2010) as "The role Budget Liquidation Report of parliamentary oversight on the state" The results show that, Budget Liquidation Report of resulting in decreased violations government agencies and increase accountability to the public and the study showed that the Budget Liquidation Report is not much use in planning future the government. The hypotheses of the study The first hypothesis, There is significant correlation between lack of proper legal infrastructures and The second hypothesis, There is significant correlation between lack of proper reporting frameworks and The third hypothesis, There is significant correlation between lack of accounting and auditing standards and The fourth hypothesis, There is significant correlation between not state budgeting based on performance and The fifth hypothesis, There is significant correlation between not state reporting based on performance and RESULTS Findings in the form of hypotheses To examine the hypotheses, 340 subjects were selected among which the number of questions in the questionnaire, 324 responded. After a description of the data at this stage, to integrate the data and assumptions for each of the research hypotheses through a chi-square test were tested. THE RESULTS OF THE FIRST HYPOTHESIS First by adding the values of the responses to each question and answer each of the questions related to this hypothesis, the following results were obtained. In order to evaluate the limit (lack of proper legal infrastructures) Insert report on the performance audit report of the chi-square test was used in the Budget Liquidation Report. Therefore, to test this hypothesis, the hypothesis H 0 and H 1 can be expressed as follows: Hypothesis H 0 : There is not significant correlation between lack of proper legal infrastructures and Hypothesis H 1 : There is significant correlation between lack of proper legal infrastructures and Insert reports obtained from the performance audit in the Iran s Budget Liquidation Report. questions, the number 119 option (Very High) have marked, the number 134 option (High) have marked, the number 64 option (Somewhat) have marked, the number 5 option (low) have marked and the number 2 option (Very low) have marked, Because the responses (mode) option (High) has been obtained, and the chi-square value (235/29) achieved and the significance level (0/000),that is less (%5), with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report greatly is limited by lack of proper legal infrastructures. The results suggest the hypothesis H 1 is accepted. Table No 1 summarizes the results of show. Table1. Descriptive and inferential data first hypothesis low Somewhat high very high a THE RESULTS OF THE SECOND HYPOTHESIS the limits (lack of proper reporting framework) in performance audit reports included in the Budget Liquidation 19

4 Report the chi-square test was used. Therefore, to test this hypothesis, the hypothesis H 0 and H 1 can be expressed as follows: Hypothesis H 0 : There is not significant correlation between lack of proper reporting frameworks and Hypothesis H 1 : There is significant correlation between lack of proper reporting frameworks and Insert reports obtained from the performance audit in the Iran s Budget Liquidation Report. questions, the number 114 option (Very High) have marked, the number 107 option (High) have marked, the number 96 option (Somewhat) have marked, the number 5 option (low) have marked and the number 2 option (Very low) have marked, Because the responses (mode) option (Very High) has been obtained, and the chi-square value (195/9) achieved and the significance level (0/000),that is less (%5), with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report greatly very is limited by lack of proper reporting frameworks. The results suggest the hypothesis H 1 is accepted. Table No 2 summarizes the results of show. Table 2. Descriptive and inferential information second hypothesis low Somewhat high very high a THE RESULTS OF THE THIRD HYPOTHESIS the limits (lack of governmental accounting and auditing standards) performance audit reports included in the Budget Liquidation Report the chi-square test was used. Therefore, to test this hypothesis, the hypothesis H 0 and H 1 can be expressed as follows: Hypothesis H 0 : There is not significant correlation between lack of accounting and auditing standards and Hypothesis H 1 : There is significant correlation between lack of accounting and auditing standards and questions, the number 104 option (Very High) have marked, the number 118 option (High) have marked, the number 87 option (Somewhat) have marked, the number 12 option (low) have marked and the number 3 option (Very low) have marked, Because the responses (mode) option (High) has been obtained, and the chi-square value (195/9) achieved and the significance level (0/000),that is less (%5), with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report greatly is limited by lack of accounting and auditing standards. The results suggest the hypothesis H 1 is accepted. Table No 3 summarizes the results of show. Table 3. Descriptive and inferential information the third hypothesis very low low Somewhat high very high a 20

5 THE RESULTS OF THE FOURTH HYPOTHESIS the limits (non- governmental budgeting based on performance) performance audit reports included in the Budget Liquidation Report the chi-square test was used. Therefore, to test this hypothesis, the hypothesis H 0 and H 1 can be expressed as follows: Hypothesis H 0 : There is not significant correlation between not state budgeting based on performance and Hypothesis H 1 : There is significant correlation between not state budgeting based on performance and questions, the number 143 option (Very High) have marked, the number 115 option (High) have marked, the number 58 option (Somewhat) have marked, the number 6 option (low) have marked and the number 2 option (Very low) have marked, Because the responses (mode) option (Very High) has been obtained, and the chisquare value (248/19) achieved and the significance level (0/000),that is less (%5), with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report greatly very is limited by not state budgeting based on performance. The results suggest the hypothesis H 1 is accepted. Table No 4 summarizes the results of show. Table 4. Descriptive and inferential information the fourth hypothesis low Somewhat high very high a Table 5. Data V descriptive and inferential the fifth hypothesis low Somewhat high very high a THE RESULTS OF THE FIFTH HYPOTHESIS the limits (failure to provide reports based on the public sector) performance audit reports included in the Budget Liquidation Report the chi-square test was used. Therefore, to test this hypothesis, the hypothesis H0 and H1 can be expressed as follows: Hypothesis H 0 : There is not significant correlation between not state reporting based on performance and Hypothesis H 1 : There is significant correlation between not state reporting based on performance and questions, the number 95 option (Very High) have marked, the number 150 option (High) have marked, the number 73 option (Somewhat) have marked, the number 4 option (low) have marked and the number 2 option (Very low) have marked, Because the responses (mode) option (High) has been obtained, and the chi-square value (245/04) achieved and the significance level (0/000),that is less (%5), with a 95% confidence level 21

6 reveals that insertion of performance auditing reports in budget liquidation report greatly is limited by not state reporting based on performance. The results suggest the hypothesis H 1 is accepted. Table No 5 summarizes the results of show. CONCLUSIONS Considering that the aim of this study is to identify the major constraints of inserting performance auditing reports in Iran s budget liquidation report. To achieve this goal the scholar has designed a questionnaire based on five-point Likert scale, and has distributed the questionnaire between members of the statistical population including auditors and experts of Supreme Audit Court, who has been chosen according to random sampling. The questionnaire is focused on polling about factors which hinder the insertion of performance auditing reports in budget liquidation report. For hypothesis testing, the chi-square (χ2) test has been used. The result of survey the research hypotheses and reject the hypothesis H 0, with a 95% confidence level reveals that insertion of performance auditing reports in budget liquidation report is limited. The results confirmed these expectations of researcher are the recorded of the level of limitation in performance audit reports based on statistical results in the Budget Liquidation Report. In other words, the variables insert the limits of performance audit reports including the (lack of proper legal infrastructures, lack of proper reporting frameworks, lack of accounting and auditing standards, not state budgeting based on performance, and not reporting based on performance) In other words, the variables insert the limits of performance audit reports including the (lack of proper legal infrastructures, lack of proper reporting frameworks, lack of accounting and auditing standards, not state budgeting based on performance, and not reporting based on performance) that insertion of performance auditing reports in budget liquidation report greatly is limited. The results of the first hypothesis indicate the lack of a legal infrastructure the insert statements is the performance audit reports from the audit function one of the major limitations insert in the Iran s Budget Liquidation Report. It is necessary, first of Supreme Audit Court with regard to legal removing barriers, instructions and regulations necessary to approve the action. The results of the second hypothesis suggests a lack of proper reporting framework for performance audit reports are published another report from the restrictions included in the audit report the Budget Liquidation Report, It is necessary, the Supreme Audit Court of Iran with respect have to its legal responsibility, using the opinions of experts of appropriate reporting framework. The results of the third hypothesis suggests a lack of accounting and auditing standards in the public sector as one of the limitations of financial reporting in the public sector, The performance audit reports is listed in Iran s budget liquidation report to problems. Therefore, it is recommended the Supreme Audit Court of Iran setting standards should strive in accounting and auditing standards in the public sector. The results of the fourth hypothesis suggests that insertion of performance auditing reports in budget liquidation report greatly very is limited by not state budgeting based on performance. It is essential order to transparency financial reporting in the public sector, the government budgeting system of fourth development plan Act has remained to inconclusive operating budget should be amended. The results of the fifth hypothesis suggests that, Failure to submit public sector reports on the Based on performance of barrier report the implementation performance audit reports in the Iran s Budget Liquidation Report. It is necessary, Instructions government reports including the annual statement instructions that by the Ministry of Economic Affairs and Finance to the Supreme Audit Court of Iran, Should be prepared on the basis of performance because to conformity with the auditing results will be easier. ACKNOWLEDGMENTS At the end of all our teachers, students and colleagues who have helped in compiling this research have the utmost gratitude. REFERENCES Abdullahi Z Budgeting structural problems the country's. Agro-Industry Trap Journal in Iran. 23: Danshfrd K, Qizilbash H The role Budget liquidation report of parliamentary oversight on the state, Management Accounting Journal in Iran, 4, 93p. Everett J The politics of comprehensive auditing in fields of high outcome and cause uncertainty, Critical Perspectives on Accounting. 14(1/2): Glynn JJ Performance auditing and performance improvement in government, public sector management reform, changing accountabilities and the role of performance audit. In: Performance auditing and the modernization of government. Paris: OECD: Joypa H The Problems of Conducting performance audit by the Supreme Audit Court and Suggestions for Improvement" Audit science Journal In Iran. 2(40): Kiaye A Operational audit and performance audit, similar to the components approaches and different goals, Audit 22

7 science Journal in Iran. 31: Mansoorfar K Statistical methods, Tehran Iran: Tehran University Press. Mansourian N, Agah V The Supreme Audit Court of Iran and French legal systems (comparative study), Law and Politics Journal in Iran. 31, 354p. Rahmani Fazli A, Sadeghi M Performance audit and its relation with geographical studies (A Case study of the Environmental Crisis in Uremia Lake), Audit science Journal In Iran. 12(48):