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THE FACTORS THAT INFLUENCE AUDIT QUALITY FROM THE PERSPECTIVE OF THE AUDIT FIRMS


This research study explored the factors that influence audit quality from the perspective of audit firms in Malaysia. An auditors is expected to review the financial statements and assess the accuracy of the financial information provided by the company. In this study, external auditor is the party discussed rather than internal auditor. The study predicted that audit firm size, audit firm industry experience and audit firm independence to positively influence audit quality. Furthermore the study also expected that the level of audit quality among audit firms in Klang Valley is to be moderate. The selected sample of population for this study is the audit firms located in Klang Valley. This study adopted a quantitative approach via questionnaire to collect data which is later analysed using descriptive statistics, correlation and regression analysis. The findings of the study showed that the level of audit quality among audit firms in Klang Valley is high than expected. In addition, the audit firm industry experience has statistically positive association with audit quality. While the other factors such as audit firm size and audit firm independence have no association with audit quality. The result suggested that the audit firm industry experience is the most important factor to be considered in determining audit firm quality. There are three implications of this study. The first implication of this study can be viewed from the theoretical point whereby agency theory expects that audit firm with good industry experience would be able to monitors the management of company better. Thus this will reduce the agency problem that might occurs in the company and satisfy the concern of shareholders. The second implication is related with the internal audit policy, where the audit firms can enhance their audit quality by reviewing the current standards of reporting in Malaysia and reconsidering to adopt the International Auditing Guidelines (IAG), International Standards on Auditing (ISA) and International Auditing Practice Statements (IAPS). In addition, the human resource department of the audit firm should provide better training and development programme in order to enhance the individual auditor industry experience. The HR officer also should select an appropriate person with the right kind of criteria to be employed as the auditor in the firm. The third implication is on the policy standpoint whereby the government and professional bodies such as Malaysian Institute of Accountant should revised and set higher standard when granting membership and license to an auditor. In addition, Bursa Malaysia should revised its listing requirement in relation to audit firm service period in order to strengthen the audit firm’s independence.

  • FATIN HANAN BT MUHAMAD FARID
  • December 2016
  • Master of Corporate Administration (MOCA)/GRAD ICSA
  • Shah Alam, Selangor
  • BILIK THESIS FSPPP
  • 21
  • Completed
Supervisor

List of Supervisor

PROF MADYA DR NORZIANA BINTI LOKMAN

Senior Lecturer

Dr. Norziana Lokman is a senior lecturer at Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA Shah Alam Selangor.

norzianadr norzianadr ziana
  • FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES
  • 603-5543 5867
  • PhD in Corporate Administration/Corporate Governance

DR SARINA BINTI OTHMAN

Senior Lecturer

Sarina Othman is a senior lecturer at the Faculty of Administrative Science & Policy Studies, UiTM Shah Alam, Malaysia. She has been teaching in the area of Corporate Governance, Company Secretarial Practice, Organizational Behaviour and a few other Management subjects for almost 11 years.

  • Shah Alam, Selangor
  • +03-55435887
  • MSc Corporate Governance in Corporate Governance
About

DiTIS is a short form of FSPPP’s Dissertations and Theses Inventory System. Since the establishment of FSPPP, the faculty has produced volumes of post-graduate and undergraduate dissertations and/or theses. Therefore, there is a dire need to establish a database to manage these high volumes of dissertations and theses.

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