Nur Barizah Abu Bakar

Factors influencing auditor independence: Malaysian loan officers' perceptions

PurposeAuditor independence is fundamental to public confidence in financial reporting and the auditing profession. The study aims to provide further understanding of the factors influencing auditor independence from the perspective of commercial loan officers. Loan officers formed the sample as they are relatively sophisticated financial statement users who would understand the importance of audit report and the issues related to auditor independence.Design/methodology/approachThe study examines the perceptions of commercial loan officers in Malaysian‐owned commercial banks and a total of 86 officers responded to the self‐administered questionnaire.FindingsResults indicate that smaller audit firms, audit firms operating in a higher level of competitive environments, audit firms serving a given client over a longer duration, larger size of audit fees, audit firms providing managerial advisory services, and, the non‐existence of an audit committee, are perceived as having a higher risk of losing independence. Audit firm size appears to be the most important factor that affects the auditor independence, followed by tenure, competition, audit committee, audit firms providing managerial advisory services and size of audit fee.Originality/valueThe paper provides important insights into the factors affecting auditor independence and contributes towards better understanding on the ways to improve the confidence in financial reporting and credibility of the auditing profession.

Accounting treatment for corporate zakat: a critical review

Purpose - The purpose of this paper is to review the accounting treatments for corporate zakat, as advocated by accounting standards and guidelines, as well as those been practised by relevant corporations. The aim is to determine their appropriateness and adherence to both the Islamic as well as the accounting theoretical perspectives. Design/methodology/approach - Accounting standards and guidelines related to zakat, including the Financial Accounting Standard No. 9 and the Technical Release Findings - The study reveals that there is a general misconception of zakat, as indicated in several standards and guidelines, which has consequently resulted in inappropriateness in their proposed corporate zakat recognition and measurement and hence presentations. These inaccuracies, in one way or another, have not been in line with the true spirit of zakat in Islam. More worryingly, some unfavorable consequences may and in fact have already been implicated on the larger Muslim community as a result. Research limitations/implications - An alternative view on the accounting treatment of corporate zakat is offered in this paper with the aim to provide a fair and proper assessment of zakat on corporate wealth, which is more parallel to the true spirit of zakat. Originality/value - The paper integrates both the revealed and the contemporary accounting knowledge in scrutinizing the standards and practices as well as in recommending an improved and meaningful alternative.

Ethics of Future Accounting Professionals: Evidence from Malaysia

A strong ethical sense needs to be imbued in potential entrants to the accountancy profession. This paper explores the ethical attitudes of the final year accounting students in the International Islamic University Malaysia. There were 210 students who responded to the self‐administered questionnaire survey. Of these respondents, 38 per cent would opt to become whistleblowers. About 3 per cent would accept bribes. Once an element of risk of being caught was introduced, the percentage opting for whistleblowing increased by 6 per cent. However, none chose the bribe option. These responses indicate that only a small porportion of students will depend on punishment and penalty in order to behave ethically. A larger proportion of male students as compared to female tend to behave unethically. The study indicates that the majority of respondents would prefer not to indulge in unethical behavior. The primary contribution of this paper is that it offers insight on Malaysian accountancy students’ ethical attitudes.

Financial Management Accountability Index (FMAI) in the Malaysian public sector: a way forward

The National Audit Department (NAD) of Malaysia has introduced the Financial Management Accountability Index (FMAI) within the framework of the audit rating system. This study shares the Malaysian experience in using FMAI as an accountability medium, evaluates the FMAI scores obtained by agencies, and proposes measures to enhance the usefulness of FMAI. The study uses secondary data as provided on the NAD website. Descriptive analyses were conducted in evaluating the rating scores across agencies. It was found that majority of the agencies have a ‘good’ financial management system, with Federal agencies performing better than their counterparts at the State level. It was also found that the overall rating system and FMAI suffer from lack of proper disclosure, consequently reducing their worthiness. There are still areas of improvement that need to be addressed by the NAD to enhance the value of the overall audit rating system. Points for practitioners The FMAI, which has been developed and used in Malaysia, is an important initiative that can be emulated by public managers in other governments, either in its current form or with modifications. It is particularly useful for benchmarking purposes. In the context of Malaysia, this research provides important insights for public policy-makers on how the usefulness of the audit rating system can be further increased.