IFRS Compliance and Audit Quality Among Big 3 Auditors: The Case of Goodwill Impairment
18 Pages Posted: 25 Jan 2014
Date Written: July 16, 2013
The highly prescriptive and technical provisions of Financial Reporting Standard (FRS) 136 – Impairment of Assets (FRS 136, 2009) represent a very substantial variation from past practice. This gives rise to questions about how Malaysian companies and their auditors have fared during the process of transition to a complex reporting regime. Hence, this study examines the degree of technical compliance with the disclosure requirements of FRS 136 (Amended by Annual Improvements to IFRSs 2009) by a sample of 20 large Malaysian shariah approved companies used as a proxy for audit quality. This research employed six analytical structures to distinguish audit quality among the Big 3 in an attempt to question the homogeneity of audit quality assumption. The evidence presented in this study suggests that there is no variation in audit quality among the Big 3 and contributes to the existing literature that audit quality among the largest audit firms is homogenous. The findings will be of interest to investors, analysts, regulators and in other jurisdictions undergoing transition to IFRS.
Keywords: Goodwill, FRS136, Impairment, Malaysia
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