Audit Committee and the Selection of External Auditors: The Malaysian Evidence
The role of audit committee in corporate governance includes monitoring the system of corporate financial reporting, the process of internal control and internal audit, and the appointment of external audit, and the appointment of external auditors. Past studies examine the relationship between the selection of external auditors with audit committee variables, which include the activeness, independence, financial literacy of members and their director position in the companies. However, this study examines the relationships between these variables and interactions of some of the variables with the effectiveness in terms of selecting good auditors. Financial literacy of members of audit committee is found to be unrelated to the selection of external auditor. However the study finds that the interaction between independence of audit committee and frequency of meeting has negative significant relationship with the selection of industry specialist auditors.

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