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Investigating audit quality among Big 4 Malaysian firms

Author

Listed:
  • Tyrone M. Carlin
  • Nigel Finch
  • Nur Hidayah Laili

Abstract

Purpose - The purpose of this paper is to contemplate the degree to which technical expertise in Malaysian Big 4 auditing practice survives periods of material regulatory inflexion sufficiently to underpin quality financial reporting outcomes. Design/methodology/approach - The adoption of IAS in Malaysia in 2006 introduced a highly technical standard (financial reporting standards – FRS 136) which impacted not only preparers but also auditors of financial statements. This transition period represents a unique opportunity to interrogate the content of financial statements drawn up under new and complex standards, with a view to gaining insight into the quality of oversight offered by the audit profession. Findings - Contrary to the view within the extant literature that there is homogeneity in audit quality among Big 4 firms, this paper reports substantial cross‐sectional variation among the sample of Big 4 Malaysian audit firms and reports on distinctly poor compliance levels. Research limitations/implications - The research focuses on compliance with various requirements under FRS 136 –Impairment of Assetsamong a sample of first‐time adaptors drawn from the FTSE Bursa Malaysia Index whose 2006 financial accounts have been audited by a Big 4 auditor. Practical implications - The results raise questions about audit quality among the sample firms and the robustness of regulatory oversight institutions operating within Malaysia. Originality/value - This research illustrates a novel approach to examining the issue of audit quality by introducing a compliance quality approach focusing on note‐form disclosures.

Suggested Citation

  • Tyrone M. Carlin & Nigel Finch & Nur Hidayah Laili, 2009. "Investigating audit quality among Big 4 Malaysian firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 17(2), pages 96-114, July.
  • Handle: RePEc:eme:arapps:v:17:y:2009:i:2:p:96-114
    DOI: 10.1108/13217340910975251
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    Citations

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    Cited by:

    1. Abdul Majid, Jamaliah, 2015. "Reporting incentives, ownership concentration by the largest outside shareholder, and reported goodwill impairment losses," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(3), pages 199-214.
    2. Najihah Yaacob & Ayoib Che-Ahmad, 2012. "Audit Fees after IFRS Adoption: Evidence from Malaysia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 2(1), pages 31-46, June.
    3. Jamaliah Abdul Majid, 2019. "Contemporary Issues Surrounding an Impairment-Only Approach to Acquired Goodwill: A Selected Review," International Business Research, Canadian Center of Science and Education, vol. 12(4), pages 90-97, April.
    4. Redhwan Ahmed Ali Al-Dhamari & Sitraselvi Chandren, 2018. "Audit Partners Gender, Auditor Quality and Clients Value Relevance," Global Business Review, International Management Institute, vol. 19(4), pages 952-967, August.

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