REGULATORY MONITORING AND REGULATEE’S FIRM PERFORMANCE: AUDIT THEMATIC FINDING ON WATER OPERATOR PERFORMANCE IN MALAYSIAN WATER SERVICES INDUSTRY

Abstract

This study provides a report of the audit thematic findings on the regulatory role of regulates firm performance. Based on the literature, audit activities are part of a monitoring mechanism that can improve firm performance in a situation where a controlling power such as holding shares and executive power does exist. However, in the context of the regulator and regulate relationship in the Malaysian water services industry, the regulator has the authority to control and monitor the regulator's firm performance. The regulator has monitoring power stipulated by law, the Water Services Industry Act 2006 (Act 655). In this scenario, the regulator does not hold any share in the regulator's firm, neither holds executive power such as sitting as a board of directors. Method: Conducting a longitudinal thematic audit on water services providers (Regulatee /Auditee) and continuous monitoring activities. Sixteen studies with five themes on thirteen water operators in Malaysia have been conducted to confirm the finding. The audit execution holds by the Water Industry Audit Division (Auditor), a regulatory representative. Result: Consistent with the prior study and in line with the objective of the regulatory establishment in ensuring the sustainability of the water services industry, the report found several improvements in regulator's firm performance that further improves national water services efficiency. Conclusion: This study extends the current dimension of a common auditor’s role in regulatory audit activities as a monitoring mechanism that elaborates regulatory effectiveness towards the regulator's firm performance.