Allameh Tabataba'i University

 News

Babajani, J., Salimi, M., Taghavi fard, M., Mohebi, E. (2024). A Financial Reporting Model for Regional Electric Companies in Iran. , 21(84), 1-40. doi: 10.22054/qjma.2023.73559.2455
Jafar Babajani; Mohammad Javad Salimi; Mhammad taghi Taghavi fard; Ehsan Mohebi. "A Financial Reporting Model for Regional Electric Companies in Iran". , 21, 84, 2024, 1-40. doi: 10.22054/qjma.2023.73559.2455
Babajani, J., Salimi, M., Taghavi fard, M., Mohebi, E. (2024). 'A Financial Reporting Model for Regional Electric Companies in Iran', , 21(84), pp. 1-40. doi: 10.22054/qjma.2023.73559.2455
Babajani, J., Salimi, M., Taghavi fard, M., Mohebi, E. A Financial Reporting Model for Regional Electric Companies in Iran. , 2024; 21(84): 1-40. doi: 10.22054/qjma.2023.73559.2455

A Financial Reporting Model for Regional Electric Companies in Iran

مطالعات تجربی حسابداری مالی
Article 1, Volume 21, Issue 84, January 2025, Pages 1-40    PDF (1.14 M)
Document Type: Research Paper
DOI: 10.22054/qjma.2023.73559.2455
Authors
Jafar Babajani* 1; Mohammad Javad Salimi2; Mhammad taghi Taghavi fard3; Ehsan Mohebi4
1Professor, Department of Accounting, Allame Tabataba’i University, Tehran, Iran.
2Assistant Professor, Department of Accounting, Allame Tabataba’i University, Tehran, Iran.
3Professor, Department of Industrial Management, Allame Tabataba’i University, Tehran, Iran
4PhD Student, Department of Accounting, Allame Tabatabae’i University, Tehran, Iran.
Abstract
Regional Electric companies are organizations that pursue both social and financial goals in order to fulfill their assigned missions, so fulfilling accountability for their dual goals is of fundamental importance. In this research, by examining the information needs of the users of the financial reports, the factors affecting the financial reporting of the sector have been studied. The aim of this research is to present a model for the environmental conditions and characteristics of regional electric companies in Iran. For this purpose, the required data, after a library study and exploratory search in the theoretical foundations and financial and accounting rules and regulations governing the relations of these entities, were collected using a questionnaire and analyzed using the fuzzy Delphi research method and appropriate statistical tests. The evidence from the analysis of the respondents’ views shows that the influencing factors are in four dimensions, including the compatibility of the model in achieving the organization's goals, the needs of information users, compliance with financial and accounting laws and regulations, and finally, budget control and credit status reporting. Experts also agree on the factors proposed by this research for designing and explaining the financial reporting model of regional power companies in Iran.

Introduction

 The government and other public sector institutions provide many goods and services essential to society. One of the most significant areas in which the government engages in commercial activities is the energy sector, particularly the electricity industry, which plays a key role in social and economic development and in improving the quality of life in society. The financial resources of the country’s regional electricity companies are derived from various sources and must be utilized for specific purposes in compliance with various laws and regulations.
Given the fundamental importance of performance and the evaluation of accountability by authorities to stakeholders in democratic governments, it is necessary to produce clear and reliable reports on how resources are allocated and consumed in different areas. This research seeks to identify the weaknesses and shortcomings of the financial statements of these institutions by reviewing existing literature and employing other methods. Ultimately, the study presents a suitable model for the financial reporting of these institutions, enabling improved accountability and more effective economic decision-making.
Research Question
What is the financial reporting model of Iran's regional electricity companies?

Literature Review

Sayedi and Babajani (2011) conducted research with the aim of achieving a desirable model of financial reporting in Islamic capital markets. The findings of their research confirmed the usefulness of relying on the fund theory to achieve reporting goals. The result of their study led to a financial reporting model in which the central focus is not the economic entity but rather the main business activities and departments of the company.
Babajani and Shekarkhah (2012), using the Delphi method, investigated the appropriate accounting model for Islamic banking in Iran. According to their findings, the accounting system used by experts was unable to meet user needs and required changes, the generalities of which were presented as key factors in the proposed research model. Additionally, the research indicated that a conceptual framework based on accountability is more suitable than one based on decision-usefulness for financial reporting in the usury-free banking system.
Mohammadi et al. (2020), in their research to develop a desirable model of financial reporting in the public sector, addressed the key factors influencing public sector financial reporting. The results showed that the quality of public sector financial reporting is influenced by factors such as budgeting structure, public sector infrastructure, the quality of human resources, the accounting system and basis, education, and the accountability system governing society. Weaknesses identified in the research include poor implementation of accrual accounting, incomplete implementation of operational budgeting, political influence in decision-making processes, lack of access to the annual budget performance statement and budget deduction report, and non-identification of certain financial statement items.

Methodology

The current research is an applied and developmental study. It aims to analyze existing conditions and assist in the decision-making process, classifying it as descriptive research. Furthermore, since it seeks to gather the opinions of a large statistical community on the research subject, it is categorized as descriptive-survey research.
Using the fuzzy Delphi method, the statistical population includes experts selected based on three criteria: the presence of representatives from expert groups, deep knowledge of the research topic, and breadth of opinion and expertise. These experts were chosen from groups such as auditors, the head of the State Court of Audit, auditors of executive bodies, directors of audit organizations, and academic faculty members with relevant experience. Participants were selected through snowball sampling.
Initially, to identify the dimensions, components, and indicators of the Financial Reporting Model for Regional Electric Companies in Iran, a review of the subject literature was conducted. After identification, examples of these cases in the public sector were examined based on expert opinions. Given the advantages of the fuzzy Delphi method (29FDM) compared to the traditional Delphi method (30TDM), the fuzzy Delphi method was employed in this research.

Results

By examining the needs of users and the current state of financial reporting for regional electric companies, which is affected by several factors, it was found that the financial reporting models of private sector for-profit institutions cannot fully address the information needs of users in this sector. The findings of this research revealed that the operating environment and user needs in this sector differ significantly from those of private-sector for-profit institutions. These differences have created challenges in aligning the information needs of users with the form and content of the current financial reports, leaving report users facing difficulties.
In this research, by identifying and analyzing the factors influencing an appropriate financial reporting model for Iran's regional electric companies, a step has been taken to better meet the information needs of users. Identifying the set of influencing factors for the proposed model, in accordance with the conditions and laws governing the financial and accounting systems of this sector, and determining the importance of each factor in the desired framework are among the key findings of this research effort.

Discussion

According to the findings of the research, the consistency of the model in reporting the degree of achievement of the set goals of regional electric companies, the consistency in supporting the goals of information users, its compliance with financial and accounting rules and regulations, as well as budget control and credit status reporting, were identified as the effective dimensions of the reporting model. Each of these dimensions comprises several components and indicators.

Conclusion

This research aimed to present a financial reporting model for Regional Electric Companies in Iran. Using the fuzzy Delphi method and based on expert opinions, the dimensions, components, and indicators of the proposed model were identified and presented.
 
Keywords
Financial reporting; Regional electric companies; Users of information
References
  1. Andrews, A. (2014). Downward accountability in unequal alliances. World Development, 6(54), 99-113.
  2. Barton, A. (2005). Professional Accounting Standards and the Public Sector – a Mismatch. Abacus, 41(2), 138-158.
  3. Bradford, A., Luke, B., & Farneux, G. (2018). Social enterprise accountability: directions, dominance and developments. Social Enterprise Journal. 14(2), 156-179. https://doi.org/10.1108/SEJ-03-2017-0018.
  4. Brennan, N. M., & Solomon, J. (2008). Corporate governance, accountability and mechanisms of accountability: an overview. Accounting, Auditing & Accountability Journal, 21(7), 885-906.
  5. Campbell, D., Moore, G., & Shrives, P. (2006). Cross-sectional effects in community disclosure. Accounting, Auditing & Accountability Journal, 19(1), 96-114.
  6. Connolly, C., & Kelly, M. (2011). Understanding accountability in social enterprise organisations: a framework. Social Enterprise Journal, 7(3), 224-237.
  7. Connolly, C., & Kelly, M. (2020). Annual reporting by social enterprise organizations: “legitimacy surplus” or reporting deficit? Accounting, Auditing & Accountability Journal, 33(8), 1997-2025.
  8. Costa, E., & Andreaus, M. (2020). Social impact and performance measurement systems in an Italian social enterprise: a participatory action research project. Journal of Public Budgeting, Accounting & Financial Management, 21(8).
  9. Dart, R., Clow, E., & Armstrong, A. (2010). Meaningful difficulties in the mapping of social enterprises. Social Enterprise Journal, 6(3), 186193.
  10. Davis, J. H., Schoorman, F. D., & Donaldson, R. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20-47.
  11. Deegan, C., & Unerman, J. (2011). Financial Accounting Theory, European Edition, 2nd ed., McGraw Hill Education, Maidenhead, Berkshire.
  12. Deegan, C. (2002). The legitimising effect of social and environmental disclosures - a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282-311.
  13. Dittenhofer, M. (2009). Performance auditing in governments. Managerial Auditing Journal, 16(8), 438-442.
  14. Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: social values and organizational behavior. Pacific Sociological Review, 18(1), 122-136.
  15. Foster, W., & Bradach, J. (2005). Should Nonprofits Seek Profits? Harvard Business Review. 16(8), 438-442.
  16. Freeman, R.E., Harrison, J.S., Wicks, A.C., Parmar, B.L., & De Colle, S. (2010). Stakeholder Theory: The State of the Art, Cambridge University Press, Cambridge, MA.
  17. Gray, R., Bebbington, J., & Collison, D. (2006). NGOs, civil society and accountability: making the people accountable to capital. Accounting, Auditing, & Accountability Journal, 19(3), 319-348.
  18. Greiling, D., Traxler, A. A., & Stötzer, S. (2015). Sustainability reporting in the Austrian, German and Swiss public sector. International Journal of Public Sector Management, 28(4/5), 404-428.
  19. Julie, R. & Albertini, E. (2022). Reconciling the social sector with external accountability requirements: Lessons from stewardship theory. Journal of Business Research, 142, 485-498.
  20. Karan, R. (2003). Selective Commercialisation of Public-Sector Accounting and its Consequences for Public Accountability. Australian Accounting Review, 13(3), 15-25.
  21. Kearns, K.P. (1994). The strategic management of accountability in non-profit organisations: an analytical framework. Public Administration Review, 54(2), 185-203.
  22. Kilcullen, L., Hancock, P., & Izan, H.Y. (2007). User requirements for not-for-profit entity financial reporting: an international comparison. Australian Accounting Review, 17(41), 26-37.
  23. Laughlin, R.C. (1990). A model of financial accountability and the church of England. Financial Accountability and Management, 6(2), 93-114. doi: 10.1111/j.1468-0408.1990. tb00427.x.
  24. Luke, B. (2016). Measuring and reporting on social performance: from numbers and narratives to a useful reporting framework for social enterprises. Social and Environmental Accountability Journal, 36(2), 103-123. doi: 10.1080/0969160 X.2015.1103298.
  25. Mulgan, R. (2000). ‘Accountability’: an ever‐expanding concept?. Public administration, 78(3), 555-573.
  26. Nicholls, A. (2009). We do good things, don’t we? Blended value accounting in social entrepreneurship. Accounting Organisations and Society, 34, 755-769.
  27. Roya, S., Yetano, A., & Garciz-Lacalle, J. (2019). Accountability Styles in tate-Owned enterprises: The good, the bad, the ugly ... and the pretty. Spanish Accounting Review, 22(2), 156-170.
  28. Ryan, C., & Mack, J. (2006). Reflections on the Theoretical Underpinning of General Purpose Financial Reports of Australian Government Departments. Accounting Auditing & Accountability Journal, 24, 559-580.
  29. Williams, A. P., & Taylor, J. A. (2013). Resolving accountability ambiguity in nonprofit organizations. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 24, 559-580.
  30. Yetano, A., & Sorrentino, D. (2023). Accountability disclosure of SOEs: comparing hybrid and private European news agencies. Meditari accountancy research, 2, 294-319.
  31. Accounting Standard setting Committee. (2019). Accounting and Auditing Principales and regulations Accounting Standards. Edition 30. [In Persian]
  32. Azar, A., & Faraji, H. (2002) Fuzzy management science. Iran Management and Productivity Studies Center. [In Persian]
  33. Babajani, J. (2016). Advanced Public Sector Accounting Based on Multiple Track Financial Reporting Approch, Allameh Tabataba’i University Publication. [In Persian]
  34. Babajani, J., & Moharami, M. (2018). Determination of financial performance measurement indicators and accounting system capabilities for financial accountability in Tehran Municipality. Empirical Studies in Financial Accounting, 14(55), 1-30. [In Persian]
  35. Babajani, J., & Shekarkhah, J. (2012). Appropriate accounting model for Islamic banking in Iran with emphasis on partnership contracts. Stock Exchange Journal, 5(17). [In Persian]
  36. Babajani, J., Shekarkhah, J., & Ebrahimpour, S. (2019). The Status of Implementation of Audit Organization’s AccountingStandards in the Public Sector Institutions of Islamic Republic of Iran. Journal of Financial Accounting Knowledge, 6(2). [In Persian]
  37. Mohammadi, A., Mohammadzadeh Salteh, H., Dianati Deilami, Z., & Aghdam Mazraeh, Y. (2020). Presentation of Challenges Detail Model Quality of Financial eporting in the Public Sector: Based on Grounded Theory Approach. Empirical Studies in Financial Accounting, 16(63), 27-51. [In Persian]
  38. Sayedi, H., & Babajani, J. (2011). Developing a Model for Financial Reporting in Islamic Capital Markets: The Case of Islamic Republic of Iran. Journal of Accounting Advances, 2(1), 1-37. [In Persian]
Statistics
Article View: 1,792
PDF Download: 796


login