Factors Affecting External Audit Quality In Malaysia

Abstract

The aims of this study are to understand the importance of audit quality and determine potential factors that might affect the external audit quality and also to highlight its importance of maintaining the external audit quality in Malaysia. This work will examine the effect of size of audit firm, audit tenure and industry specialization on external audit quality in Malaysia.This work was done based on quantitative research approach. In this study, a survey questionnaire is used as a purpose of obtaining data from respondents. The online questionnaires was distributed to fifty auditing firms in Malaysia which has been chosen randomly. SPSS software was used for the data analysis and data were analyzed in terms of Pearson Correlation Analysis and Multiple Regression. The result showed that there is weak positive relationship between the size of audit firm, audit tenure and industry specialization on external audit quality in Malaysia.The size of audit firm has a positive relationship with external audit quality as the correlation coefficient (r) obtained is 0.366. the correlation coefficient, r value of 0.383 indicates a weak positive relationship between audit tenure and external audit quality in Malaysia. The industry specialization has a direct influence on the external audit quality because the correlation coefficient (r) obtained from Pearson correlation analysis is 0.772.