THE ROLE OF AUDITORS IN THE CONTEXT OF CORPORATE GOVERNANCE

Auditors examine company’s accounts and report to the company on the accounts. Fundamentally, the concern is how auditors carry out these duties effectively. Legislations namely Companies Act 1965, Securities Industry Act 1983 which has been consolidated as Capital Market and Services Act 2007 have made major inroads to ensure that auditors carry out their duties and obligations effectively. Additionally, the Code of Corporate Governance was drawn in 2001 and amended in 2007, to further enhance the effectiveness of audit in the interests of stockholders and stakeholders. Nonetheless, it is pertinent to determine whether the Code of Corporate Governance is adequate and comprehensive in ensuring that auditors play effective role in auditing a company. This is particularly imperative in the light of recent scandals involving auditors in Malaysia and in other parts of the world. The study then proceeds to explore the appropriate litmus test in laying down sound principles governing the duties and obligations of auditors. This is crucial because there is increased reliance by the stockholders and stakeholders on auditors. Moreover, there is a growing concern for corporate governance domestically, regionally and globally. Thus, a comparative study is also carried out as to how the issue of corporate governance is addressed in other parts of the world. Finally, the study shows that the Malaysian Code of Corporate Governance governing the duties and obligations of the auditors has not produced the desired result pertaining to accountability