Audit Committee and the Amendments of Quarterly Financial Reports among Malaysian Companies

Ku Nor Izah Ku Ismail, Sharifah Asmawati Syed Abd Rahman

Abstract


ABSTRACT
This paper examines the association between audit committee characteristics (independence, expertise and activities) and the amendments of quarterly financial reports of Malaysian companies. Control variables, namely size of board of directors, size of company, profitability and auditor are also included in this study. In this study, each of the 63 sampled companies that amended their quarterly reports in 2005 is matched with a company that did not make any amendments. Results of the regression test indicate that companies having audit committees with two or more financial experts are less likely to amend their quarterly reports. Although other variables (except for auditor) appear to have a negative association with amendments, statistically the association is insignificant. This study also observed that most of the amendments are due to oversight, mathematical mistakes and typographical errors. The findings suggest that to be effective, audit committees should have more than one financial expert.

ABSTRAK

Kertas ini mengkaji hubungan antara ciri-ciri jawatankuasa  audit (kebebasan, kepakaran dan aktiviti) dan pindaan terhadap laporan suku tahunan syarikat. Pemboleh ubah kawalan seperti saiz lembaga pengarah, saiz dan
keberuntungan syarikat, dan juru audit juga diambilkira dalam kajian ini. Dalam kajian ini, kesemua 63 syarikat
yang dikaji yang meminda laporan suku tahunan bagi tahun 2005 dipadankan dengan syarikat yang tidak membuat
sebarang pindaan. Hasil ujian regresi menunjukkan lembaga pengarah yang mempunyai dua atau lebih orang pakar
dalam bidang kewangan tidak mempunyai kecenderungan untuk meminda laporan suku tahunan. Walaupun faktor
lain (kecuali juru audit) mempunyai hubungan yang negatif dengan pindaan, secara statistik hubungan adalah tidak
signifikan. Kajian juga menunjukkan yang pindaan biasanya dibuat atas alasan terlepas pandang, kesilapan matematik,
dan kesilapan menaip. Penemuan kajian menunjukkan bahawa bagi mewujudkan jawatankuasa audit yang berkesan,
seharusnya ia mempunyai lebih daripada seorang pakar dalam bidang kewangan.


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