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Does Audit Quality Matters in Malaysian Public Sector Auditing?

Author

Listed:
  • Aida Hazlin Ismail
  • Natasha binti Muhammad Merejok
  • Muhamad Ridhuan Mat Dangi
  • Shukriah Saad

Abstract

Auditors play a key role in contributing to the credibility of the financial statements on which they are reporting. High-quality audits support financial stability. The responsibility for performing quality audits of financial statements rests with the auditors. However, audit quality is best achieved in an environment where there is support from and appropriate interactions among participants in the financial reporting supply chain. Most prior studies look into audit quality from the perspective of private sector however this study focus on the quality of public sector auditing in Malaysia. There are three independent variables being investigated in this study that are the auditor¡¯s independence, auditor¡¯s competency and auditor¡¯s workload. Data were collected through the distribution of questionnaires to 114 samples of auditors involved in public sector audit in Malaysia. The data were analysed using correlation test and regression test. The findings of this study show that there are positively significant relationship between auditor¡¯s independence and auditor¡¯s competency on audit quality. The results revealed that auditor¡¯s competency is the most significant factor affecting the audit quality in public sector audit. However, results show that auditor¡¯s workload has a negative and insignificant impact on audit quality. Hence, this study recommends that the audit departments to strengthen the audit quality and could improve the quality of the financial reporting in the public sector. In addition, auditor¡¯s competency should be enhanced among the auditors in public sector to ensure high quality of audit work performed. Future studies should explore other variables such as client satisfaction, auditor switching and auditor¡¯s turnover in public sector auditing.

Suggested Citation

  • Aida Hazlin Ismail & Natasha binti Muhammad Merejok & Muhamad Ridhuan Mat Dangi & Shukriah Saad, 2019. "Does Audit Quality Matters in Malaysian Public Sector Auditing?," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 203-215, May.
    • Handle: RePEc:jfr:ijfr11:v:10:y:2019:i:3:p:203-215
    DOI: 10.5430/ijfr.v10n3p203
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    References listed on IDEAS

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    1. Seyed Mahmoud Hosseinniakani & Helena Inacio & Rui Mota, 2014. "A Review on Audit Quality Factors," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 243-254, April.
    2. Stübinger, Johannes & Walter, Dominik & Knoll, Julian, 2017. "Financial market predictions with Factorization Machines: Trading the opening hour based on overnight social media data," FAU Discussion Papers in Economics 19/2017, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. Kamisah Supian & Norasekin Ab Rashid, 2018. "The Role of Supplier, Top Management and Government in Halal Practices Integrity of Malaysian Food Business," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 8(8), pages 549-559, August.
    4. Kamisah Supian & Norasekin Ab Rashid, 2018. "The Role of Supplier, Top Management and Government in Halal Practices Integrity of Malaysian Food Business," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 8(8), pages 549-559.
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    Cited by:

    1. Fahmi Givari Akbar & Khoirul Aswar & Noegrahini Lastiningsih, 2020. "Determinants of Audit Quality in Indonesia Supreme Audit Institution: A Conceptual Study," Information Management and Business Review, AMH International, vol. 12(2), pages 38-41.

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