Managing the impact of international financial reporting standards on audit and non-audit fees: Some empirical findings and ethical discussions

Abdul Rashid, Hafiz Majdi and Wan Lokman, Wan Abdul Wahid and Annuar, Hairul Azlan and Hamdan, Hamdino (2017) Managing the impact of international financial reporting standards on audit and non-audit fees: Some empirical findings and ethical discussions. International Journal Business Management, 2 (2). pp. 1-17. ISSN 0127-9815 E-ISSN 0127-9890

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Abstract

The aim of this study is to examine the association between IFRS adoption (in the context of Malaysia, MASB aligns its standards substantially with the IFRS requirements and called the standards as MFRS) and audit and non-audit fees paid to external auditors in Malaysia. The sample companies are 166 companies listed on Bursa Malaysia for the financial year ended 2006 (i.e. the first year which the MASB converged its standards to IFRS). The results reveal that IFRS adoption is positively and significantly associated with statutory audit fees. The results are consistent with the literature which suggests IFRS adoption will result in increased scope of work and responsibility of the external auditors, which finally entails additional costs. However, there is no evidence to support the hypothesis that non-audit fees are positively and significantly associated with IFRS adoption. Therefore, the suspected ethical dilemma on auditor independence in the case of IFRS adoption is not supported by the empirical results. Hence, in order to control the potential increase in audit fees charged, the accounting regulators such as Malaysia Institute of Accountants (MIA) and Malaysia Accounting Standard Board (MASB) should provide clearer guidelines in interpreting and understanding the newly adopted IFRS.

Item Type:	Article (Journal)
Additional Information:	2109/63821
Uncontrolled Keywords:	Audit fees International Financial Reporting Standards (IFRS) Financial Reporting Standards (FRS) Statutory audit fees Non-audit fees Malaysia
Subjects:	H Social Sciences > HF Commerce > HF5001 Business. Business Administration > HF5601 Accounting. Bookkeeping
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Accounting Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Hairul Azlan Bin Annuar
Date Deposited:	24 May 2018 10:02
Last Modified:	24 May 2018 10:02
URI:	http://irep.iium.edu.my/id/eprint/63821

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