Chapter in Book

Evidence of audit failures documented worldwide have led to major criticism of the auditing professions' independence and exposed its implication on shareholders and stakeholders' interests. External auditors are expected not only be independent but more importantly must be seen to be independent when examining and attesting clients' financial statements. Auditors are expected to decide on reporting strategies without any influence from their clients' management.

We are in doubt on whether the book editors will ever publish this article that questioning the degree of auditor independence. We have repeatedly heard from colleagues (and foes) that papers that touched this issues has been sidelined by unseen upper hands from being accepted in academic publications. However, we choose to remain steadfast to express our concern about auditor indepence. In this article attempt to, albeit in a small scale, discuss and report an objective assessment of this pertinent concept.

The objective of this chapter is to examine the effects of the joint provision of audit and non-audit services on perceived auditor independence from the perspective of senior managers of audit firms, loan officers and public listed companies in Malaysia. The effect of join provision of audit and non-audit services might be different when auditor perform the services based on their available resources.

The accounting profession plays a major role in facilitating good governance, accountability and transparency among corporate participants, and more importantly. It has become the 'gatekeeper of financial truth' (A-Kadir, 2000), Indeed, the role played by auditors was deemed to be the financial aspect of corporate governance. Good financial reporting is critical to effective functioning of the capital market.