Nor Zalina Mohamad Yusof

The Malaysian market for audit services: ethnicity, multinational companies and auditor choice

Purpose – The purpose of this paper is to investigate the extent to which ethnic association (i.e. Chinese and Bumiputra ownerships) and national issues (i.e. the presence of foreign corporations) influence the audit services market in Malaysia. Specifically, the paper aims to examine the effects of ethnicity and foreign ownership on choice of auditor.Design/methodology/approach – Two logit models are used; the first is to test on ethnic auditor (Chinese/non‐Chinese) choice while the second is related to the choice of quality‐differentiated auditor. The data is obtained from annual reports of the population of the Bursa Malaysia listed companies for both the Main Board and the Second Board for the periods 1993‐1995.Findings – The logit regressions confirm our prediction of ethnic networking and preferential treatment on the auditor selection process.Research limitations/implications – The first limitation lies on the auditor choice model where the model is developed from a demand perspective, assuming tha...

Financial restatements and corporate governance among Malaysian listed companies

Purpose - This paper seeks to examine the effects of Malaysian Code on Corporate Governance on the nature of financial restatements in Malaysia and whether corporate governance characteristics are associated with financial restatements. Design/methodology/approach - Data for this paper are obtained from annual reports that had been restated for the period of 2002-2005 with firm-years being the unit of observation. A control group comprising non-restating firms is formed using match-pair procedures where restated and non-restated firms are matched by size, industry, exchange board classification, and financial year end. The data are subsequently analyzed using a Findings - The results show that the primary reason for misstating the accounts is to inflate earnings. The nomination committee of the firms that restated is found to be less independent with higher managerial ownership. The logistic regression analysis indicates that the extent of ownership by outside blockholders deters firms from misstating accounts. Surprisingly, audit committee independence is associated with the likelihood of financial misstatement. Financial restatements, nevertheless, are not found to be associated with board independence, managerial ownership, and CEO duality. Finally, the results show that firms with high level of debts are more likely to commit in financial misstatement. Practical implications - The research is significant as it provides evidence on the role of corporate governance, especially the independence of the nomination committee and extent of ownership by outside blockholders in Malaysia. It shows that outside blockholders is effective in disciplining managers so that the accounts so prepared are not misleading. The move in 2007 by the Malaysian Government to require companies audit committee to be composed of only independent and non-executive directors, as well as requiring audit committee members to be financially literate, should be seen as important in ensuring the effectiveness of the audit committee. Originality/value - This research is considered as the first study which examines the effects of corporate governance variables on the incidents of financial restatements in a developing country. The findings of this paper would be useful for policy makers in evaluating the importance of corporate governance in emerging countries, specifically on the issue of quality financial reporting.

Practical Training and the Audit Expectations Gap: The Case of Accounting Undergraduates of Universiti Utara Malaysia

The accounting profession has long faced the issue of an audit expectations gap; being the gap between the quality of the profession’s performance, its objectives and results, and that which the society expects. The profession believes that the gap could be reduced over time through education. Studies have been carried out overseas and in Malaysia to determine the effect of education in narrowing the audit expectations gap. Extending the knowledge acquired, this paper investigates whether academic internship programs could reduce the audit expectations gap in Malaysia. Using a pre-post method, the research instrument adapted from Ferguson et al. (2000) is administered to the Universiti Utara Malaysia’s accounting students at the beginning and end of their internship program. The results show there is a significant change in perceptions among students after the internship program. However, changes in perceptions do not warrant an internship program as a means of reducing the audit expectations gap as misperceptions are still found among respondents on issues of auditing after the completion of the internship program. Nevertheless, an internship program can still be used to complement audit education in a university as it is an ideal way to expose students to professional issues and enables them to have a better insight of the actual performance and duties of auditors.

Development of Auditing in Malaysia: Legal, Political and Historical Influences

This work investigates the role and contribution of external auditing as practised in the Malaysian society during the forty year period from independence in 1957 to just before the onset of the Asian Financial Crisis in 1997. It applies the political economic theory introduced by Tinker (1980) and refined by Cooper & Sherer (1984), which focuses on the social relations aspects of professional activity rather than economic forces alone. In a case study format where qualitative data was gathered mainly from primary and secondary source materials, the study found that the function of auditing in the Malaysian society in most cases is devoid of any essence of mission; instead it is created, shaped and transformed by the pressures which give rise to its development over time. The largely insignificant role that it serves is intertwined within the contexts in which it operates.

Internal audit quality dimensions and organizational performance in Nigerian federal universities: the role of top management support

The study examines the moderating effects of top management support in the relationship between internal quality dimensions and organizational performance in Nigerian federal universities. The study employed a sample of internal audit staff at senior level from 40 federally owned universities in Nigeria where 400 samples have been drawn for the analysis. Questionnaire instrument was used in generating the data having subjected to Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) aimed at establishing underlying dimensions. The data was collected and analysed using inferential statistics and the findings revealed that interaction of internal audit competence, internal audit independence, and internal audit size, with top management support significantly and positively influence organization performance of Nigerian federal universities. The findings provide ground for new policy initiatives to strengthen internal audit and enriched the literature by providing the moderating effect of top management support as instrumental to organizational performance. It is therefore recommended that internal audit competence internal audit independence and internal audit size should be given more attention and mechanism through which these qualities can be employed and sustained for more internal audit service delivery and efficiency in Nigerian federal universities.