Abstract

This research study on The Effect of Audit Committee Characteristics to Financial Distress in

Public Sector; case study at National Audit Department (JAN), Putrajaya. This research

examines how audit committee characteristics effecting financial distress at JAN. Several

characteristics identified through this study which are diligence, composition, independence

and competence of the audit committee. The scope is in the JAN and the respondents are among

the staff of JAN. Quantitative research methods are used to obtain data in this study. The data

collection was used descriptive analysis method. The data collection technique used is through

a survey using questionnaire which is aimed to get the main data from the respondent as the

sample in this study. From the findings, researcher found that composition and competence

characteristics of audit committee related to financial distress but diligence and independence

are not. Hence, some of the characteristics affecting the financial distress and some are not.

The next researcher is recommended to conduct characteristics audit committee review on

financial distress among private sector employees because it is believed that the results will be

different because the working environment in the private and government sectors is different

and the way of work is also far different and this can invite to a variety of factors may help

researchers in the future.

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 ACKNOWLEDGMENT

First of all, researcher would like to thank for having the opportunity to write out some of our

appreciations to a few parties that help researcher and contributing for the effort of making this

final project paper become success. I would like to express researcher sincere gratitude and

deep appreciation to the first supervisor Madam Zulaihan Binti Ismail for her help when doing

this project until the end.

Researcher friend also help a lot when do this project if researcher don’t get support from

them maybe we not be able completed to do this task. She help a lot of thing in this project

like teach me the thing. Finally researcher also extremely grateful to beloved family for their

love, care and give support while do this project. She also encouragement and understanding

while researcher still studying far away from them. For researcher, she is the very best family

in this world and don’t have thing that can replace her.

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 DECLARATION

I acknowledge that this Final Year Project Paper is the result of my original work except the
excerpt and souvenir that each has already outlined. I also acknowledge that this report has
never been developed before, and is not progressed simultaneously, for other degrees whether
at Open University Malaysia or at other institutions.

(Signature)

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NAME:

Date:

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 TABLE OF CONTENTS

TITLE

ABSTRACT ii

ACKNOWLEDGMENT iii

DECLARATION iv

TABLEOF CONTENT v

LIST OF TABLES vii

 CHAPTER I

1.0 Introduction 1

1.1. Background of the study 2-4

1.2. Problem statement 4-8

1.3. Study objectives 9

1.4. Study contribution 10

 CHAPTER II

Literature Review

2.1. Introduction 11

2.2. Concept and Theory

2.2.1. Audit committees 12

2.2.2. Characteristics 13

2.2.3. Financial distress 17

2.3. Review of literature 18-25

2.5. Conceptual framework 26

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  CHAPTER III

3.1. Introduction 27-28

3.2. Sampling technique 28-29

3.3. Data Collection 30

3.4. Data Analysis 30-31

3.5. Study plan (Gantt chart) 31

 CHAPTER IV

4.1. Demographic profile 32

4.2. Respondents response in general 33-45

4.3. Descriptive analysis 46

4.4. Correlation between variables 47-49

4.5. Discussion 50-53

4.6. Summary 54

 CHAPTER V

5.1. Summary of findings 55-56

5.2. Conclusion 57-58

5.3. Implication 59-61

5.4. Suggestion 62-63

APPENDICES

 QUESTIONNAIRE 64-68

 REFERENCES 69-74

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LIST OF TABLES AND FIGURES

1. Figure 1: Relationship between variables

2. Figure 2: Percentage pie chart by gender

3. Figure 3: Percent of respondent age

4. Figure 4: Level of Involvement in Audit Committee Meeting pie chart

5. Figure 5: Education level percentage

6. Figure 6: Years of service at JAN percentage

7. Figure 7: Percentage of respondent grade position

8. Table 1: Respondents' demographic characteristics

9. Table 2: Financial distress in public sector

10. Table 3: Diligence of committee at JAN

11. Table 4: Composition of audit committee at JAN

12. Table 5: Independence of audit committee at JAN

13. Table 6: Competence of committee at JAN

14. Table 7: Mean, Standard Deviations, Maximum and Minimum Variables Value

15. Table 8: Correlation between financial distress (F) with audit committee characteristic,

Diligence (D) di JAN

16. Table 9: Correlation between Financial Distress (F) with audit committee characteristics,

Composition (C) at JAN

17. Table 10: correlation between financial distresses (F) with Independence characteristics

of audit committee (I) at JAN

18. Table 11: correlation between financial distresses (F) with Competence characteristics of

audit committee (CO) at JAN

19. Table 12: Relationship between variables meets the general objective

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