audit committee – Jurnal Pengurusan

The Audit Committees, Internal Audit and External Audit Quality Effects on Earnings Management: An Analysis of Malaysian Government-Linked Companies

asriwn — Tue, 31 Jan 2023 07:45:46 +0000

The role of audit governance mechanisms as part of the corporate governance architecture has been promoted to ensure the integrity of the financial reporting process. In order to get insights on their effectiveness, this study investigates the effects of the audit governance mechanism, specifically audit committee, internal audit function and external audit quality on earnings management in Malaysian government-linked companies. Using a cross-sectional variation of the modified Jones Model (1995) to estimate discretionary accruals, this study examined 38 GLCs from 2009–2018, which consisted of 340 firm-year pair observations. Panel data regression analysis was carried out using the generalised least square method to analyse the effect of audit governance mechanisms on earnings management. The findings suggest that lower likelihood of earnings management is associated with the internal audit function. Further analysis on the proxy of internal audit measures suggests that in-house internal audit function is negatively associated with earnings management. This research would provide insights for regulators and management to strengthen in-house internal audit function in order to mitigate earnings management in Malaysian government-linked companies.

Factors Influencing Public Sector Auditees on Implementing Audit Recommendations

SITI HASLINA TON ZAINAL ABIDIN — Sat, 08 Oct 2022 18:46:48 +0000

An increase in audit queries and recurring audit issues every year show that the public sector auditees are taking a longer time or are reluctant to take action on audit recommendations. This study examines the relationship between attitudes and six reference groups namely auditors, follow-up audit, accountability index, Auditors General’s Dashboard, the Audit Committee and the media, with the intention of auditees to implement the audit recommendations. Data are gathered through a survey of 226 Malaysian public sector auditees who have the responsibility to implement audit recommendations. This study shows that the auditees’ attitude, the media, the Audit Committee and the accountability index have influenced the intention of auditees to implement the audit recommendations. However, when the analysis is based on the actual implementation of audit recommendations, by ignoring the element of intention, the study finds slightly different findings. It is found that accountability index, the Audit Committee, Auditors General’s Dashboard, auditors and follow-up audit have an influence on the implementation of the audit recommendations. This study supports the Theory of Reasoned Action and introduces accountability index as a factor that influences auditees’ intention to implement audit recommendations. Also, this study provides implication to the public sector’s authorities of Malaysia in enhancing the role of media, the Audit Committee and accountability index in assisting the public sector to improve service rendered.

The Comparative Moderating Effect of Risk Management Committee and Audit Committee on the Association Between Voluntary Risk Management Disclosure and Firm Performance

SITI HASLINA TON ZAINAL ABIDIN — Sat, 08 Oct 2022 18:30:13 +0000

The purpose of this study is to examine the comparative moderating effects of two separate risk governance mechanisms on the relationship between voluntary risk management disclosure (VRMD) and firm performance (FP). This study utilizes content analysis method to collect VRMD data, while FP is measured based on investors’ perspective, represented by Tobin’s Q. Multivariate statistical tests show that the existence of Risk Management Committee (RMC) augmented the association between VRMD and FP. However, the appointment of audit committee (AC) and the quality of AC which are represented by size, independence, education and number of AC meetings, do not have any moderating effect on the relationship between VRMD and FP. The findings suggest that risk governance mechanisms do matter to investors in evaluating risk management information. The findings also provide empirical evidence that should be of interest to the management of company and regulatory bodies in terms of deciding upon whether or not to establish RMC as a separate committee from AC.

The Influences of Risk Management Committee and Audit Committee towards Voluntary Risk Management Disclosure

sufizulkarnain01 — Sat, 08 Oct 2022 07:01:44 +0000

The main objective of this study is to examine the influences of committees that are being appointed to manage risk towards voluntary risk management disclosure (VRMD) among non-financial companies in Malaysia. Non-financial companies will usually appoint either Risk Management Committee (RMC) or Audit Committee (AC) to manage their risks. Based on resource dependence theory, this study contends that the committees provide risk management resources particularly in terms of risk management information that could influence the VRMD. All data of VRMD, RMC and AC were collected from companies’ annual reports by using content analysis method. The sample in this study consisted of 395 non-financial companies which were listed on Bursa Malaysia in 2011. Our multiple regression results show that RMC presence and AC activeness increase VRMD. Our findings provide evidence that the establishment of RMC could increase the risk management disclosure among companies in Malaysia.