EXPLORING THE FACTORS INFLUENCING AUDITOR INDEPENDENCE: EVIDENCE FROM THE MALAYSIAN CONTEXT
DOI:
https://doi.org/10.35631/AIJBES.829019Keywords:
Auditor Independence, Audit Quality, Corporate Governance, Economic Bonding, Institutional Theory, Professional Skepticism, Malaysia, Financial Reporting IntegrityAbstract
Auditor independence is a key component in ensuring audit quality, financial reporting credibility, and investor confidence. However, increasing concerns over audit failures, corporate scandals, and the growing commercialisation of the auditing profession have intensified debates regarding auditors’ ability to maintain objectivity and professional skepticism. In Malaysia, corporate scandals such as Serba Dinamik Holding Berhad have created awareness regarding the effectiveness of auditor independence despite ongoing regulatory enforcement and governance initiatives. The objective of this conceptual paper is to explore the key determinants or factors influencing auditor independence within the Malaysian context. This study found that long-term audit tenure, high audit fees from non-audit services, the effectiveness of the audit committee, and ethical culture within audit firms are among the factors that may affect auditor independence. The methodology used is a conceptual review approach by critically performing content analysis of previous literature from globally and Malaysian perspective. Besides, this study integrates multiple theoretical perspectives, such as agency, institutional, and economic bonding theory, to provide a comprehensive understanding of the factors that affect an auditor's independence. Previous literature remains inconclusive, especially regarding the effect of audit tenure and non-audit services on auditor independence. Many of the existing studies also focus on developed economies, with limited attention to developing markets such as Malaysia, where concentrated ownership structures, political influence, and evolving governance environments may shape auditor behaviour differently. This paper also suggests a conceptual framework by explaining how economic pressures, governance mechanisms, institutional environments, and ethical considerations may influence auditor independence in Malaysia. The study contributes significant facts for regulators, audit firms, and policymakers in maintaining audit quality, strengthening corporate governance, and enhancing financial reporting integrity. Therefore, the public trust toward the accounting profession can be enhanced by maintaining auditor independence during the performance of services.
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