Factors Influencing Voluntary Audit among SME Companies in Malaysia

Abstract

Small and Medium Enterprise (SME) companies in Malaysia have been given an opportunity for not having their financial statements to be audited under audit exemption regulations. However, there are companies voluntarily demanding for financial audit. Thus, this study examined the factors influencing voluntary audit among SME companies in Malaysia. Three factors were chosen namely, firm size, related stakeholder, and internal control towards voluntary audit. Using a survey questionnaire as the research instrument on 122 of SMEs, the results show that there is a significant positive relationship of related stakeholders and internal control in influencing voluntary audit among SME companies in Malaysia. Firm size however shows an adverse result by the significant negative relationship towards voluntary audit. The findings also prove that all the three factors have significant influence on SMEs in demanding for voluntary audit with related stakeholder appears as the strongest predictors in this study. This study achieved all of the three objectives. It provides further understanding from the SMEs viewpoint and the agreeableness to demand for voluntary audit despite the exemption provided by the regulators. Furthermore, the study also provides significant implications to the practical view for SME companies and accounting firms, and to academic view as the study may contribute to the researchers and educators on the view of voluntary audit after the regulation has taken place.