Razana Juhaida Johari^1*, Nuur Najaahtul Najihah Baharuddin², Ayatulloh Musyaffi³ and Ganesan Palanisamy⁴

¹Faculty of Accountancy, Universiti Teknologi MARA Shah Alam, Malaysia
²Focus Point Vision Care Group Sdn. Bhd., Petaling Jaya, Malaysia
³Department of Accounting, Universitas Negeri Jakarta, Jakarta, Indonesia
⁴Kalasalingam Business School, Kalasalingam Academy of Research and Education, India

ABSTRACT

Despite all the efforts given through various government initiatives, accounting standards and rigorous ethical codes, the persistence of global corporate scandals such as Enron and Worldcom, along with Malaysian fraud cases like Serba Dinamik Holdings Berhad and 1MDB deteriorated the public trust on accounting profession. The occurrences of the various malpractices raise concerns on the ethical principles that accountants should uphold in exercising their duties in safeguarding the interest of the shareholders and stakeholders at large. Therefore, this study examined the effect of accounting practitioner’s internal factors (integrity, objectivity, confidentiality, professional behavior and professional competences and due care) and external factors (i.e. ethical climate and ethical leadership) on accounting practices in Malaysia. A survey of 165 accounting practitioners who worked in Klang Valley, Selangor found that all the internal factors except professional behavior and one of the external factors i.e. ethical leadership have a significant effect on accounting practices. These findings provide insight into the extent of these factors among Malaysian accountants, supporting the development of ethical training programs, regulatory reforms and professional policies to uphold the public confidence on the accounting practitioners.

Keywords: Ethical Code of Ethics, Ethical Climate, Ethical Leadership, Accounting Practices