Enhancing audit quality through clan control in Malaysian public accounting firms / Aida Hazlin Ismail and Zakiah Muhammaddun Mohamed

• Main Authors: Hazlin, Aida, Muhammaddun Mohamed, Zakiah
• Format: Article
• Language: English
• Published: Universiti Teknologi MARA, Shah Alam 2012
• Subjects: HJ Public Finance; Auditing
• Online Access: http://ir.uitm.edu.my/id/eprint/43949/1/43949.pdf; http://ir.uitm.edu.my/id/eprint/43949/; https://jas.uitm.edu.my/index.php/14-archieve-2015/20-volume-9-no-2-dec-2012
• Institution: Universiti Teknologi Mara

The aim of this paper is to explicate the ways in which auditing firms in Malaysia develop control system in human resource management to improve audit quality. This study focuses specifically on clan controls within auditing firms to enhance audit quality which is the core component of International Standard on Quality Control 1 (ISQC 1) implementation. International Federation of Accountants (IFAC) has introduced six elements of ISQC 1 including human resource that could promote audit quality within auditing firms. Six audit partners representing Big Four and Non Big Four auditing firms in Malaysia were interviewed. Data obtained through the in-depth interviews were analyzed using constant comparative method. Elements of human resource management investigated in the study are communication, recruitment, training, leadership style or involvement, review process and appraisals. Findings suggest the Big Four institute different forms of clan control than their counterpart the Non-Big Four firms. The Big Four firms have more formal, systematic and structured controls as compared to the Non-Big Four firms. The main contribution of this study is the emerging framework that depicts the differences in clan controls and audit quality measures between the Big Four and Non-Big Four auditing firms. The framework promotes a new understanding on the diverse process of attaining audit quality among auditing firms in Malaysia.