Sherliza Puat Nelson

Corporate governance and audit report timeliness:evidence from Malaysia

Purpose: The purpose of this study is to examine the impact of corporate governance characteristics on audit report timeliness in Malaysia. The corporate governance characteristics to be examined are board independence, audit committee size, audit committee meetings and audit committee qualifications. Design/methodology/approach: The sample comprises of 703 Malaysian listed companies from Bursa Malaysia for the year 2009. The study excludes companies from finance-related sector due to different regulatory requirements and subjected to supervision of the Central Bank of Malaysia. Further, regression analysis was performed to examine the audit report lag determinants. Findings: Results show that audit report timeliness is influenced by audit committee size, auditor type, audit opinion and firm profitability. However, no evidence was found to support the effect of board independence, audit committee meetings and audit committee qualifications on audit report lag. Research limitations/implications: Apart from contributing to the literature on corporate governance and audit timeliness, this study also examines the consequences of regulatory changes, such as legislation that was introduced to strengthen corporate governance and financial reporting transparency. Originality/value: This study investigates the effectiveness of corporate governance on audit and financial reporting timeliness. And provide recent empirical evidence on audit delays in an emerging economy country.

Audit committee experts and earnings quality

Purpose – The purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange Commission requires firms to identify their audit committee financial experts.Design/methodology/approach – Based on two theories, the resource dependence theory and agency theory, the study examines the association of audit committee experts with financial reporting quality, proxied by earnings management. Samples involved 2008 financial data of 300 firms that were ranked by highest market capitalisation. In total, four types of expertise are developed based on academic qualification, professional qualification and work experience.Findings – Presence of non‐accounting experts and accounting experts is significant to reduce the magnitude of earnings management. Other than that, leverage and firms size are also foun...

Ownership structures influence on audit fee

Purpose – The purpose of this paper is to investigate the association between corporate ownership structures and audit fees paid to external auditors by Malaysian companies listed on Bursa Malaysia. This study focusses on the extent of the auditor’s reliance on the client’s internal control inasmuch as the corporate ownership structures are varied, and, ultimately, affect the audit fees. Design/methodology/approach – This study applies the agency theory in formulating three hypotheses that guide the results analysis. By employing a multi regression model for a sample of 345 Malaysian companies listed on Bursa Malaysia, this study examines the relationship of ownership structure, namely, managerial ownership, foreign ownership and government ownership with audit fees using data for 2010. Findings – The results show a significant positive relationship between audit fees and firms with larger foreign ownership and government ownership but no significant relationship with firms with higher managerial ownership. This study contributes recent evidence concerning the relationship between corporate ownership structure and audit fees. Practical implications – Regulators may consider ownership structure on the standards or regulation setting in order to be practical and operationalized in line with the impact associated with different ownership structures. The practitioners may also design appropriate methodologies and procedures for the different ownership structures for high-quality service and to standardize the risk mitigation process. Social implications – The ownership structures have different influences on the audit fees, as well as complexity of the firms and their profitability. Originality/value – The study looks upon certain percentages of ownership structures, and how they affects audit fees, firms complexity and profitability.

Towards Developing a Disclosure Index for Malaysian Zakat Institutions

In view of understanding zakat reporting practices, this paper aims to develop a Zakat Disclosure Index (ZkDI) for Zakat Institutions (ZIs) in Malaysia. This is due to the finding of previous studies that highlighted zakat payers’ dissatisfaction on the insufficient information especially on zakat distribution part. The paper uses holistic accountability concept as a conceptual lens in developing the index. In developing the index; this paper starts by reviewing past literature and conducting semistructured interviews with zakat payers and recipients. Which then, it is reconciled and validated by a panel of experts to obtain the final ZkDI. Based on the discussions with the respondents, the results indicated that the institutions shall give more emphasis especially on financial and non-financial categories in their reporting as to ensure accountability is discharged effectively and consequently the religious obligation is fulfilled. A suggestion that annual report of zakat institutions shall be disclosed to the public was another interesting findings revealed in this paper. Since the paper focuses solely in Malaysia, thus applicability of the ZkDI to other Muslim countries which have different laws and regulations needs to be further examined. For future research, there is a possibility that the index can be improved by inviting more respondents to participate and eventually a better disclosure index can be created.

Audit committees and fraudulent financial reporting: a descriptive analysis

The study examines the background of the audit committee from the aspect of professional affiliations, postgraduate qualifications and senior managerial experiences, in association with fraudulent financial reporting.