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Malaysia Company Fraud: Cooking the Book

In: Business and Management

Submitted By yongchen
Words 5312
Pages 22
International Journal of Business and Social Science

Vol. 4 No. 13; October 2013

Cooking the Books: The Case of Malaysian Listed Companies
Fathilatul Zakimi Abdul Hamid Rohami Shafie Zaleha Othman Wan Nordin Wan Hussin Faudziah Hanim Fadzil School of Accountancy Universiti Utara Malaysia Sintok, 06010 Kedah Malaysia.

Abstract
Cooking the books refers to fraudulent accounting activities undertaken by a business to falsify its financial statements. Thus, the objectives of this study are to investigate what the cooking-the-books activities carried out by businesses consist of, how they conduct them, and what the impact is on the business and its shareholders. The case study sample companies are two Malaysian companies that had received various awards from reputable third-party organizations. On the other hand, the activities undertaken in both companies have caused them to be labelled as Malaysian mini Enrons. We employ a qualitative research methodology as most prior research employs a quantitative methodology to investigate the determinant factors in businesses’ cooking-the-book activities. The result of the study shows that the managers have used their positions, prior experience, and regulatory loopholes in their activities. Furthermore, the financial report restatement and higher reported earnings are the early warning signals of their activities. As a result of this, the Malaysian Securities Commission has revised the corporate governance code, and among others incorporated the Audit Oversight Board, known in the US as the Public Company Accounting Oversight Board. Key words: Cooking the Books, Financial Statement Fraud, Earnings Management, Malaysia, Developing Countries

1. Introduction
Belkaoui defined accounting as “the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by the…...

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