Volume 12 No. 2, December 2013
MANAGEMENT AND ACCOUNTING REVIEW, VOLUME 12 NO. 2, 2013
DEMAND FOR VOLUNTARY AUDIT BY SMALL COMPANIES IN MALAYSIA
Mazlina Mustapha
Chia Hoh Yaen
Faculty of Economics and Management
Universiti Putra Malaysia, Malaysia
Chia Hoh Yaen
Faculty of Economics and Management
Universiti Putra Malaysia, Malaysia
ABSTRACT
Small companies in many foreign countries are exempted from external audit. In Malaysia, companies are obligated to carry out an audit regardless of their size. Only sole proprietorships and partnerships are exempted from this audit. However, some of these businesses opt to audit their accounts. This study attempts to examine the value of auditing for these sole-proprietorships and partnerships. Specifically, the study aims to investigate the perception and expectations of these small business owners on the value of audits to their businesses when they voluntarily have their financial statements audited. Data for the study is obtained from two sources. Primary data is collected through a questionnaire. Interviews are also carried out to better understand the subject under study. About 62 samples are obtained from sole proprietors and partnerships in Malaysia. Multiple regression analysis is used to estimate the relationship between the variables.
The results of the study indicate that owners perceived that the voluntary audit conducted would be able to improve the quality of their financial statements. Among others, the managerial ownership and total number of employees are the characteristics that significantly influence the demand for voluntary audit. The study can be referred as a marketing survey for auditors from small and medium accounting firms in Malaysia which are auditing these small businesses. This study helps them to better understand their customers’ demand for audit. They may also develop strategies to attract partners and sole proprietors to choose audit services voluntarily.
This study provides an overview of the perceptions and expectations of small business owners on financial statement audit. This is valuable information to the Malaysian regulatory and professional accounting bodies in their consideration of audit exemption for small companies in Malaysia.
Keywords: voluntary audit, small businesses, partnership, sole-proprietors.
The results of the study indicate that owners perceived that the voluntary audit conducted would be able to improve the quality of their financial statements. Among others, the managerial ownership and total number of employees are the characteristics that significantly influence the demand for voluntary audit. The study can be referred as a marketing survey for auditors from small and medium accounting firms in Malaysia which are auditing these small businesses. This study helps them to better understand their customers’ demand for audit. They may also develop strategies to attract partners and sole proprietors to choose audit services voluntarily.
This study provides an overview of the perceptions and expectations of small business owners on financial statement audit. This is valuable information to the Malaysian regulatory and professional accounting bodies in their consideration of audit exemption for small companies in Malaysia.
Keywords: voluntary audit, small businesses, partnership, sole-proprietors.