Empirical Study on Auditors' Independence, Competencies and Integrity towards Their Detections on Fraudulent Financial Reporting in Malaysian Companies : the Mediating Effect of Audit Quality

Ng, Yuen Shyang (2022) Empirical Study on Auditors' Independence, Competencies and Integrity towards Their Detections on Fraudulent Financial Reporting in Malaysian Companies : the Mediating Effect of Audit Quality. Masters thesis, Tunku Abdul Rahman University College.

Text MBBD5308 PROJECT PAPER - Ng Yuen Shyang.pdf Restricted to Registered users only Download (933kB)

Abstract

In the 2000s, a scandal involving a company named as 1Malaysia Development Berhad had washed up throughout the newspapers, news and social media as the company is incorporated under the Ministry of Finance of Malaysia which is a government body. Hence, it has caused a critical hit on the transparency index of Malaysia as there is a scandal involving the government official who hold the highest position in the government. The company at that time has no business address and no auditors appointed to perform auditing on whether there is any element of fraud. Therefore, this paper aims to understand the role of auditors in respect of their independence, competencies and integrity in detecting fraudulent financial reporting through audit quality in Malaysian companies. In view of this, it could help to understand better on detecting fraudulent financial reporting, enhance transparency and promote corporate sustainability. Quantitative and cross-sectional study method have been adopted in this research paper to meet the objectives of this paper. Online survey questionnaire is used to collect primary data and a sample size of 128 data has been collected from respondents who work as external auditors in Malaysia, particularly in Klang Valley. SPSS Version 27.0 and SmartPLS 3.0 softwares were adopted in analysing the data collected. The data findings show that there is positive relationship on auditors’ independence, competencies and integrity in detecting fraudulent financial reporting through audit quality. This research finding helps to understand the risk of doing business in Malaysia, elements needed for external auditors to detect fraudulent financial reporting, and assess auditors’ level of independence, competencies and integrity.