MANAGEMENT & ACCOUNTING

Audit Difficulties

in Malaysia Today

Teck Heang Lee and Azham Md. Ali

Due to the break out of financial scams involving Bursa Malaysia detailed companies Transmile and Megan Media, it could be argued that 2007 was obviously a " challenging” year intended for the auditing profession in Malaysia. The " ripple” effect of the scandals caused turbulence in the auditing market which leaking over to 2008 when the auditing profession was once again inside the limelight, regarding Oilcorp Berhad. he unfavorable publicity connected with these monetary scandals could very easily destruction the fact of the auditing profession i. e. " public trust. ” Barker (2002) claimed that society's trust in a team of professional people is the " heartbeat of this profession. ” Hence, in the event that such trust is betrayed, the specialist function, as well, is ruined, since it would become worthless. Abdul Wahab Jaafar Sidek (The Superstar, 19 July 2008) with the Minority Shareholder Watchdog Group (MSWG) opined that the latest accounting scandals in Malaysia not only adversely eroded trust of the investors and stakeholders in the afflicted companies yet also influenced the honesty of the capital market, the regulators plus the auditing career. So , as far as the auditing profession is involved, if that is indeed the situation, interested parties may need to be on the highest notify for as i have said by Railborn and Schorg (2004), the existence of growing mistrust in the auditing profession could well be " a cancer that is metastasising”. Overall, there is tiny room to get doubt which the auditing career in Malaysia is currently encountering a period of significant turmoil. With fierce critique against auditors, it is only reasonable to hear the voices with the auditors themselves. This may bring to light the issues faced simply by these professionals. Who knows? This sort of enlightenment could one day lead to amicable alternatives sought by both auditors and non-auditors.

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ACCOUNTANTS TODAY • October 2008

Audit Challenges in Malaysia Today

Challenges Faced by Examine Practitioners In Malaysia

10 interviews had been conducted with audit experts working in audit firms of various sizes in Malaysia via June to August 08. Overall, it absolutely was found there are many problems faced by simply Malaysian auditors. However , with regards to this paper, the focus can be on four issues. These are: perceived benefit of audit function; hindsight evaluation of auditors' overall performance; competition intended for human capital; and taxation fees vs audit top quality.

Low perceived value from the audit function

One of the problems facing examine practitioners in Malaysia is a low recognized value with the audit function. In short, for most of the tiny audit consumers of the auditors inter seen, company auditing is viewed as a waste of money and assets. From the theoretical perspective, the necessity of an audit function may be explained by the agency theory, which denotes that because of a splitting up of control and control, the principal (owner) will screen the activities of management with an audit function. However , in Malaysia, an audit can be mandatory for a lot of companies despite their size and possession structure (i. e. public use or private companies). That is certainly, according to Section 169(1), Section 174(1) and Section 174(2) in the Companies Act 1965, almost every company in the area needs to have it is financial statements duly audited by persistent auditor. In spite of the mandatory audit requirement, many auditors have remarked that the actual contribution of auditing towards their intended reasons is in some way limited. It is because a vast majority of the firms in Malaysia are personal companies in contrast to public corporations. Furthermore, a majority of these exclusive companies are owner-managed. Hence, a great audit definitely seems to be meaningless to the majority of of the non-public companies for the reason that directors as well as the shareholders happen to be basically the same people. For this ver con reason, this explains why most examine clients include...

References: Barker, P. (2002). Audit committees: solution to a crisis of trust? Accountancy Ireland. June. Amount 34. Number 3. The Star (2008). The auditing profession – way for ward. The Legend. 19 July 2008. Sold at h t t s: / as well as b i z. to h e s t a l. c to m. m y as well as b my spouse and i z t e at the k / s to o r y. a s g? f i l at the = as well as 2 0 0 almost 8 / several / 1 9 as well as b i z t e e k as well as 1622049& sec=bizweek 19 Come july 1st. Accessed in 1 Aug 2008. Railborn, C & Schorg, C. (2004). The SarbanesOxley Action of 2002: An research of remarks on the accounting-related provisions. Journal of Organization and Supervision. Vol. 15. No . 1 ) pp. 1-13. The freelance writers can be contacted [email protected] utar. edu. my own (Teck Heang Lee) at

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ACCOUNTANCY FIRM TODAY • October 08

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