The impact of creative accounting practices on internal audit quality in Jordanian public shareholding companies: A governance and legal context

Abstract

This study investigates the impact of creative accounting practices on the quality of internal auditing in Jordanian public shareholding companies. Creative accounting, defined as managerial manipulation of financial statements to achieve desired outcomes without reflecting the true financial position, undermines transparency and misleads stakeholders. Internal audit quality plays a vital role in ensuring accountability and reliable financial reporting. A descriptive-analytical approach was employed, targeting internal auditors, financial managers, and audit committee members of all companies (161) listed on the Amman Stock Exchange (ASE). Data were collected using structured questionnaires and analyzed statistically. The results of the study indicate that creative accounting negatively affects all dimensions of internal audit quality, with the strongest impact on professional competence and performance quality. The study emphasizes the importance of competent and independent auditors in mitigating these effects and provides practical recommendations to enhance transparency, strengthen governance, and maintain stakeholder trust in Jordanian public shareholding companies.