AN INVESTIGATION ON THE EFFECT OF AUDIT COMMITTEE ON FINANCIAL REPORTING QUALITY IN PRE AND POST IFRS ADOPTION: EVIDENCE FROM MALAYSIAN COMPANIES

Purpose of study: This study sought to investigate the effect of the audit committee on Financial Reporting Quality (FRQ), explicitly focuses on the period pre- and post-mandatory IFRS adoption in Malaysia. The Financial Reporting Quality in this study proxied by earnings management. Malaysian. Methodology: The sample study has covered 81 listed companies on Bursa Malaysia, with 567 observations, which examined the time of 2009 to 2015. The relationship was analyzed by statistical multiple regression linear methods and also examined the significance of differences between pre and post IFRS adoption by paired sample t-test. Result: The main finding reveals that the relationship between the audit committee and financial reporting quality after IFRS adoption in Malaysia has more significant. However, empirical evidence showed that the post period of mandatory IFRS evidently no significant difference level of earnings management practice. This result indicates that the IFRS adoption cannot reduce managerial discretion yet and the possibility for EM manipulation for Malaysian companies. Implication/Application: This finding has critical implications for regulators and policymakers, that the consequences of IFRS adoption do not increase the quality of financial reporting when EM practices still continue in the different forms. Novelty/Originality of this study: This study gives empirical evidence that there are differences in relationship level between audit quality and earnings management in the period before and after IFRS mandatory adoption in Malaysia companies

The moderating effect of audit quality on audit committee and financial reporting quality in Malaysia

This study aims to investigate the relationship between the audit committee and audit quality on financial reporting quality. Specifically, studies on the impact of audit quality and on audit committee financial reporting quality in Malaysia have critical implications for Malaysia and this suggests to examine the significant effect of Audit Committee on Financial Reporting Quality (Earning Management). The study used financial statements of 93 of listed trading companies from 2013 to 2015 on Bursa Malaysia. Data from the financial statements were analysed with multiple regression analytical technique. Thus, this study investigates impacts of audit quality and audit committee financial reporting quality in Malaysia. The results show that the audit committee had a significantly and no significantly relationship with financial reporting quality. Based on finding audit committee independence, audit committee financial expertise, audit committee size is not supported and no significance, just audit committee meeting have a supported and significant results. As the size of audit committee increased, financial reporting quality was improved. However, this study reveals that a decreased quality of financial reporting may be a result from arisen discretionary accruals. Finally, when Audit Quality is treated as a moderator variable, there is no significant moderating impact on the relationship between Audit Committee and Financial Reporting (EM-Discretionary Accruals). This indicates that financial reporting was prepared according to generally accepted accounting standards. Therefore, understanding moderate effect of Audit Quality on Audit Committee and Financial Reporting Quality proxy Earnings Management (Discretionary Accruals) as an intervening variable could be a valuable future research field to venture