Accounting In Malaysia In The Post-New Economic Policy (NEP) Era

Following the economic recession in 1985-86 but prior to the Asian Financial Crisis in the thirdquarter 1997, accounting in Malaysia appeared to have been energised with major amendmentsof the Companies Act 1965, activation of the statutory accounting body Malaysian Institute ofAccountants (MIA) and talks over the setting up the Malaysian Accounting Standards Board(MASB). This study attempts to find out the reality of these changes and the reasons behindthis reality. By applying the political economic approach to accounting (Cooper & Sherer,1984) and with data obtained from primary and secondary source documentation and in-depthinterviews, it is found that superficial accounting changes had taken place: Companies Actamendment on additional auditor reporting duty was lacking in enforcement, the revived MIAacted inadequately as accounting regulator; and, the MASB was established with no enforcementcapability. These changes were consistent with and stemmed from Malaysia's social, economicand political attributes which were supported by the elite class.  Copyright © www.iiste.or

The relationship between non-audit service fees and audit fees in the banking sector in Malaysia

The issue of audit fees and non-audit fees charged by the audit firms has been discussed regularly in accounting and auditing literature. Recently, due to the corporate scandals in United States, the issue is discussed together with a host of revelations about audit failures that led to the companies’ demise. The auditing profession is being badly blamed and some suggest that this could be due to the audit firm’s reliance more on non-audit services rather than the audit itself. Therefore, this study attempts to probe the situation in Malaysia using the banking sector as the subject of interest. Specifically, it tries to examine the impact of non-audit services conducted by audit firms to these banks on audit fees. The results showed that the variable of non-audit fees is statistically significant in determining audit fees as predicted. Further sensitivity analysis showed that the results are robust to different measurements and company size

Internal audit in the federal government ministries, departments and agencies of Malaysia

The internal audit function is around to help members of organization in improving their activities.But the findings from in‐depth interviews conducted in the middle of 2004 with internal auditors from a total of 40 federal government ministries, departments and agencies in Malaysia have revealed a number of serious shortcomings that far outweigh the few virtues around.That is, many internal audit units have to face with the problem of shortage of staff and audit staff lacking in competency in internal audit.In addition, a majority of the audit units which are mostly operating in the less than advance audit mode has failed to get the right level of support and assistance from the Treasury and other parties.Worse, their effectiveness and efficiency is threatened by the high‐handed conduct of the National Audit Department over the shifting of its cadre staff in and out of the internal audit units.Despite all these problems, the internal auditors are quite optimistic of the audit future.On the other hand, politics of accountability theory, power distance and a Malaysian social context that replete with cases of the lack of transparency and public accountability of its major actors point to the audit’s probable bleak future

The ‘Knowledge Gap’ and ‘Deficient Performance Gap’ between Auditors and Corporate Managers: An Empirical Study in Malaysia

This paper reports the findings of a questionnaire survey of “knowledge gap” and “deficient performance gap” conducted in Malaysia on auditors and corporate managers. A total of 47 auditors and 72 corporate managers in Klang Valley responded to the survey. The aims of the study are two folds. Firstly, it ascertains the knowledge of the auditors and corporate managers of the auditors’ duties as required by the Malaysian Companies Act 1965 and the Malaysian Approved Standards on Auditing. Secondly, it elicits the perceived performance of auditors in relation to these required duties. The results of the study indicate the existence of “knowledge gap” and “deficient performance gap” between auditors and corporate managers. Overall, the results indicate that: (1) the auditors in Malaysia are knowledgeable about their duties and (2) the corporate managers have limited knowledge of auditors’ duties and they are less satisfied with some of the duties performed by the auditors

Audit specialisation in Malaysia

Recent events, especially with respect to the failure of Enron, have created an increased awareness regarding the importance of high quality audit.In general, prior research has used the Big 6/non-Big 6 dichotomy to differentiate audit quality (Palmrose, 1986).However, a second body of research suggests that industry specialisation represents an additional level of audit quality beyond the Big 6/non-Big 6 dichotomy.In this study, the focus is on trends in industry specialisation from 1999 to 2002 by applying audit firm industry market share measure as proxy for audit firm industry expertise or specialisation.Specifically, the market share approach assumes that by observing the relative market shares of the audit firm servicing a particular industry, one can deduce those which may be known as industry specialists (Zeff and Fossum, 1967; Rhode et al., 1974; Schiff and Fried, 1976; Dopuch and Simunic, 1980, 1982; Danos and Eichenseher, 1982; Craswell and Taylor, 1991; Craswell et al., 1995; Kwon, 1996; Beelde, 1997; and Hogan and Jeter, 1999).With data coming from annual reports of companies listed at the Kuala Lumpur Stock Exchange (KLSE – now, Bursa Malaysia) and industry specialists defined as market leaders with market share greater than 20 percent of audit services (in terms of the number of clients) within a client specific industry, it is found that Ernst and Young specialising in construction and plantation, KPMG in industrial products, PricewaterhouseCoopers in finance and Arthur Andersen in finance, plantation, technology and trading/services.With regard to audit market share distribution across industries, over time and over a couple of clients’ characteristics (audit fees paid out and revenues earned), it is found that four of the Big 5 audit firms (minus Deloitte Touche) take a lion share.Based on all this, in the Malaysian context in regard to the listed companies segment, the audit market could be categorised as tight oligopoly

A study of job stress among professional accountants working in selected public accounting firms : A Malaysian case

The study replicates and extands earlier studies on job in public accounting conducted in the United States (Gaertner and Ruhe, 1981) and Britain (Lyall, 1984) it is done through an extensive review of literature on job stress and field studying using the same questionnaire as utilized in the two earlier studies with only slight modifications are made to suit the Malaysia context. The study seeks answer to what may be the sources of stress, psychological outcomes and moderators of stressful situations in selected public accounting firms and wheter there exist significant linear relationships between the job stressors and mental strains

Impression management: the case of Malaysian financial graphs

This Study investigates the use and abuse of graphs in the annual reports of 100 component stocks of the Kuala Lumpur Stock Exchange (KLSE)(now Bursa Malaysia) Composite index for the year 2001. It is found that 79% of companies use graphs and that 8.1 is the mean number of graphs per graph- using companies. The most commonly graphed financial variables are sales, profit, EPS and DPS. Column and bar graph types are more popular than line and pie graphs for both KFVs (Key Financial Variables) and non-KFVs Column and bar graphs account for 98% of KFVs and 75% of all graphs. However,line and pie graphs are more likely found for the non-KFVs than the KFVs.Though there is widespread use of graphs by Malaysian companies, available evidence point to the direction that Malaysian companies are not quite sophisticated users of graphs as their counterparts in the western developed countries such as the United States and Britain.This is especially clear when it concerns impression practices of selectivity and measurement distortion where the evidence is moderately supportive of studies overseas.This is perhaps expected considering the fact that the Malaysian stock market is not as strong as those in the United States and Britain

The Relationship between Non-Audit Service Fees and Audit Fees in the Banking Sector in Malaysia

The issue of audit fees and non-audit fees charged by the audit firms has been discussed regularly in accounting and auditing literature. Recently, due to the corporate scandals in United States, the issue is discussed together with a host of revelations about audit failures that led to the companies’ demise. The auditing profession is being badly blamed and some suggest that this could be due to the audit firm’s reliance more on non-audit services rather than the audit itself. Therefore, this study attempts to probe the situation in Malaysia using the banking sector as the subject of interest. Specifically, it tries to examine the impact of non-audit services conducted by audit firms to these banks on audit fees. The results showed that the variable of non-audit fees is statistically significant in determining audit fees as predicted. Further sensitivity analysis showed that the results are robust to different measurements and company size.

The effect of non-audit services fees on audit pricing - The case of banking industry

The issue of audit fees and non-audit fees charged by the audit firms has been discussed regularly in accounting and auditing literature.Recently, due of the corporate scandals in United States, the issue is discussed together with a host of revelations about audit failures that led to companies' demise.Auditing profession is being badly blamed and some suggest this could be due to the audit firm's reliance more on non audit services than the audit itself.Therefore, this study attempts to probe the situation in Malaysia using banking sector as the subject of interest.Specifically, it tries to examine the impact of non-audit services conducted by audit services conducted by audit firms to these banks on audit fees.The result showed that the variable of non-audit fees is statistically significant in determining audit fees in as predicted.This result is important since previous studies either did not find significant relationship between audit fee and non audit services fee or that the relationship is contrary to the theory.Further sensitivity analysis showed that the results are robust to different measurements and company size