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Conflict of opinion on accounting policy judgements: independence, knowledge and problem-solving ability of audit committees in Malaysia

Author

Listed:
  • Rita Anugerah
  • Takiah Mohd Iskandar
  • Zuraidah Mohd Sanusi

Abstract

This study employs a field experiment to investigate the effectiveness of audit committee monitoring role. The study relates three audit committee characteristics, independence, financial knowledge and problem-solving ability with judgements on conflicts of opinion between management and auditors on accounting policy. Participants are members of audit committees of public listed companies in Malaysia. Using a Partial Least Squares (PLS) analysis, results show that independence, financial knowledge and ability to solve problems influence audit committee judgements. Financial knowledge mediates the effect of problem-solving ability on the judgements. There is a need for a proper membership selection policy to improve audit committee effectiveness.

Suggested Citation

  • Rita Anugerah & Takiah Mohd Iskandar & Zuraidah Mohd Sanusi, 2011. "Conflict of opinion on accounting policy judgements: independence, knowledge and problem-solving ability of audit committees in Malaysia," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 6(4), pages 340-358.
    • Handle: RePEc:ids:ijbget:v:6:y:2011:i:4:p:340-358
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