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

Authors: Rita Anugerah; Takiah Mohd Iskandar; Zuraidah Mohd Sanusi

Addresses: Faculty of Economics, Universitas Riau, Pekanbaru 28293, Indonesia. ' School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia. ' Accounting Research Institute and Faculty of Accountancy, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia

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.

Keywords: audit committees; judgement; independence; financial knowledge; problem solving ability; accounting policy; corporate monitoring; Malaysia; membership selection; audit committee membership; corporate governance.

DOI: 10.1504/IJBGE.2011.044735

International Journal of Business Governance and Ethics, 2011 Vol.6 No.4, pp.340 - 358

Published online: 06 Jan 2012 *

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