Curtin University Homepage
  • Library
  • Help
    • Admin

    espace - Curtin’s institutional repository

    JavaScript is disabled for your browser. Some features of this site may not work without it.
    View Item 
    • espace Home
    • espace
    • Curtin Research Publications
    • View Item
    • espace Home
    • espace
    • Curtin Research Publications
    • View Item

    Audit Fees During Initial Engagement in Malaysia

    Access Status
    Fulltext not available
    Authors
    Abdul Wahab, Effiezal Aswadi
    Zain, M.
    Date
    2013
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Abdul Wahab, E.A. and Zain, M. 2013. Audit Fees During Initial Engagement in Malaysia. Managerial Auditing Journal. 28 (8): pp. 735-754.
    Source Title
    Managerial Auditing Journal
    DOI
    10.1108/MAJ-Sep-2012-0752
    ISSN
    0268-6902
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/49434
    Collection
    • Curtin Research Publications
    Abstract

    Purpose – The purpose of this study is to investigate whether fees discounting exists in Malaysiaand whether such a practice impairs auditor independence.Design/methodology/approach – The paper employs a panel least regression of 3,003 firm-yearobservations of firms listed on Bursa Malaysia for the period between 1996 and 2006. The papercollects the audit fees, auditor’s identity and other firms’ characteristics data from Compustat Global,Stock Performance Guide Handbook and annual reports. The annual reports are obtained from theBursa Malaysia’s web site and Mergent Online database. The paper removes initial public offering(IPO) firms, firms involved with PriceWaterhouse and Coopers and Lybrand merger and firms forcedto switch auditor during the Arthur Andersen implosion in 2002.Findings – The analysis shows that price cutting occurs on initial audit engagements even when auditfees are publicly disclosed. Further tests suggest that the auditor recovers the “sunk cost” investedduring the initial engagement only during the fourth year of their audit engagement. Further, the paperfinds price recovery is not significantly different from normal audit fees charged for the continuingaudit engagement during the first three year period of engagement, as the audit firms will only recoverthe cost on the fourth year of engagement. Overall, this finding has an important implication forregulators, as it suggests that price recovery due to “lowballing” does not impair auditor independence.Research limitations/implications – Due to data unavailability, this study does not considerother unique factors that determine audit fees in Malaysia. Among them are political connections,institutional investors and ethnicity.Originality/value – This is the first study that examines audit pricing during an initial engagementin Malaysia.

    Related items

    Showing items related by title, author, creator and subject.

    • The impact of Chinese auditors’ values on their ethical decision-making in China
      Fan, Ying Han (2008)
      This study involves a first attempt to identify Chinese auditors’ values and examines their effects on ethical ideologies and ethical judgments and intentions. A survey methodology is used and the survey instrument includes ...
    • Overvalued Equities and Audit Fees: A Research Note
      Habib, A.; Gong, R.; Hossain, Mahmud (2013)
      Purpose – The purpose of this research note is to examine the association between overvalued equities and audit fees in the USA. Design/methodology/approach – The paper employs a standard audit fee regression model ...
    • Mandatory accounting compliance by Australian mineral resources firms: the affect of auditor independence and specialisation
      Heniro, Joshua (2010)
      The two objectives of this thesis are to investigate the magnitude of compliance with AASB 6 Exploration for and Evaluation of Mineral Resources and AASB 136 Impairment of Assets; and to examine the influence of audit ...
    Advanced search

    Browse

    Communities & CollectionsIssue DateAuthorTitleSubjectDocument TypeThis CollectionIssue DateAuthorTitleSubjectDocument Type

    My Account

    Admin

    Statistics

    Most Popular ItemsStatistics by CountryMost Popular Authors

    Follow Curtin

    • 
    • 
    • 
    • 
    • 

    CRICOS Provider Code: 00301JABN: 99 143 842 569TEQSA: PRV12158

    Copyright | Disclaimer | Privacy statement | Accessibility

    Curtin would like to pay respect to the Aboriginal and Torres Strait Islander members of our community by acknowledging the traditional owners of the land on which the Perth campus is located, the Whadjuk people of the Nyungar Nation; and on our Kalgoorlie campus, the Wongutha people of the North-Eastern Goldfields.