Browsing by Author "Wan Abdul Wahid Wan Lokman"

The purpose of this study is to examine the association between FRS adoption and audit fees paid to external auditors in Malaysia. Specifically, it is argued that the new accounting standards, FRS, are perceived to be substantially different from the old standards, which are more complicated and thus require auditors to undertake greater audit efforts, which, in turn, lead to higher fees charged to clients. Furthermore, it is also hypothesised that higher audit fees are expected to be stronger for companies that adopt FRS, as these companies are perceived to have higher risks. This, in turn, results in higher fees being paid to the external auditors. The data for the study is obtained from secondary data (annual report). The sample companies are 170 companies listed on Bursa Malaysia for the financial year ended 2006. Based on 170 sample-firms, the results reveal that FRS adoption is positively and significantly associated with statutory audit fees. The results are consistent with FRS adoption, which will result in increased scope of work and responsibility of the external auditors, and, ultimately, entails additional costs. The findings of this study in Malaysia offer support for previous finding concerning the complexity of FRS and the lack of preparation in adoption among Malaysian companies. However, there is no evidence to support that non-audit fees are positively and significantly associated with FRS adoption. This study contributes to the audit fees literature by examining the association between FRS adoption and fees paid to external auditors. In particular, instead of using a longitudinal study, this study focuses on the first year FRS adoption. Furthermore, this study is conducted in Malaysia, which is a unique environment that offers a different development towards IFRS adoption whereby the MASB is gradually and progressively improving the accounting standards towards full IFRS adoption in 2012.