ABSTRACT
Accounting firms are increasingly under a great deal of pressure to minimize audit costs and deliver services efficiently while improving the quality of their audit services. This study examines the association between political connection (POLCON), internal audit (IA) investment and arrangement with audit fees in Malaysia. Multiple regression was used to test the models and different tests were employed to enhance the rigor of the results produced. The sample comprised of 2209 firms observations listed in the Main Board of Bursa Malaysia, encompassing data from 2011 to 2013. The results show that the majority of the variables exhibit significant association with audit fees. POLCON displays positive significant association with audit fees while both IAs have negative significant association with audit fees. The result of this study contributes to the industry and existing literature by suggesting that the agency problems in POLCON firms can be minimized through effective internal control mechanisms.
