Characteristics of auditors' non-audit services and accruals quality in Malaysia
MetadataShow full item record
Purpose: The purchase of non-audit services from incumbent auditors has generated considerable attention. This study aims to examine the relationship between characteristics of non-audit services, namely, the recurrence and types of services, and accruals quality in Malaysia. Design/methodology/approach: This study analyzed hand-collected audit and non-audit fees of 1,117 observations from Malaysian firms from 2009 to 2011. This study used descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of non-audit services on accruals quality. Findings: Non-audit services are associated with lower accruals quality. Recurring and non-recurring non-audit service fees are detrimental to the quality of accruals, as are all types of recurring non-audit services. Only non-recurring audit-related services decrease accruals quality. The results demonstrate that provisions of non-audit services create economic bonding, and thus a threat to auditor independence. Results remain robust with the inclusion of corporate governance and institutional variables. Research limitations/implications: The sample period might represent a limitation as it only covers three years of data. This limitation is mainly because of the nature of data collection of the non-audit services fees. Practical implications: The findings could suggest a refinement on the Malaysian Institute of Accountants (MIA) by-laws focusing on auditor independence, and it could assist other regulative bodies such as the Securities Commission, the stock exchange (Bursa Malaysia) in ensuring better governance on the provision of non-audit services. Originality/value: This study is the first that provides evidence on the relationship between non-audit services, types, and recurring and non-recurring non-audit services and accruals quality in Malaysia.
Showing items related by title, author, creator and subject.
Political Connections, Fees Paid to Auditors and Auditor Independence in Malaysia: Evidence From Going Concern Audit OpinionsAbdul Wahab, Effiezal Aswadi; Zain, M.; Rahman, R. (2013)This study examines whether auditor independence will be affectedby the magnitude of audit and non-audit services fees provided to audit clientsand political connections. We predict that auditor independence will beundermined ...
Abdul Wahab, Effiezal Aswadi; Gist, W.; Abdul Majid, W.Z. (2014)Various types of purchased non-audit services (NAS) and their recurring nature affect the likelihood of financial statement restatements in Malaysia. Based on 953 firm-year observations during the period 2007–2009, evidence ...
Mandatory accounting compliance by Australian mineral resources firms: the affect of auditor independence and specialisationHeniro, 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 ...