AUDITOR INDEPENDENCE IN MALAYSIA

Nahariah JAFFAR (Multimedia University)
Zarehan SELAMAT (Multimedia University)
Nurhayati ISMAIL (Multimedia University)

The external auditors have been described as a person who hold the responsibility to express his / her opinion on the fairness of the client's financial statements. They are expected to be independence, not only in fact but also in appearance in conducting their professionalwork. Lack of independence has caused concern in the community. In this context, the objective of this study is to examine the impact of the degree of competition of audit clients, the provision of non-audit services, the size of the audit firm and audit tenure on Malaysian bank loan officers' perceptions of auditor independence. The perceptions of the loan officers were solicited by distributing questionnaires via drop-off-method which achieved a response rate of 63 per cent. Taken as a whole, the findings of the study suggest that the respondent would be highly confidence with the independence of the auditor if the degree of competition in the audit market is low; the auditor do not provide management consulting services to the same client; the size of the audit firm is large and the audit tenure is less than 5 years. Plausible implications of the findings of the study are presented and areas for future research are also proposed.