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Management accounting and risk management in Malaysian financial institutions: An exploratory study

Siti Zaleha Abdul Rasid (International Business School, Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia)
Abdul Rahim Abdul Rahman (Department of Accounting, Kuliyyah of Economy and Management Science, International Islamic University Malaysia, Kuala Lumpur, Malaysia)
Wan Khairuzzaman Wan Ismail (International Business School, Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 26 July 2011

Abstract

Purpose

The purpose of this paper is to examine the link between management accounting and risk management. The paper measures the extent to which management accounting practices help in managing risks and the extent of the integration between these two important managerial functions.

Design/methodology/approach

The study used a mail survey of financial institutions listed in the Malaysian Central Banks' web site. The respondents to whom 106 questionnaires were sent were the chief financial officers; the response rate was 68 percent. A total of 16 post‐survey semi‐structured interviews were also conducted with selected respondents to gain further insights into the survey findings.

Findings

The findings from the survey indicate that analysis of financial statements was perceived to contribute most towards risk management. The majority of the respondents were of the view that the management accounting function was greatly involved in the organization's risk management. Consistent with the survey findings, the interviewees also perceived that budgetary control, budgeting, and strategic planning played important roles in managing risk.

Research limitations/implications

This is a study conducted in Malaysian financial institutions and thus, results may not be generalizable to other contexts. The findings of this study strengthen the importance of both management accounting and risk management in complementing each other to form part of the corporate performance management systems.

Originality/value

This paper contributes to the literature as very few studies have examined the significant link between management accounting and risk management.

Keywords

Citation

Zaleha Abdul Rasid, S., Rahim Abdul Rahman, A. and Khairuzzaman Wan Ismail, W. (2011), "Management accounting and risk management in Malaysian financial institutions: An exploratory study", Managerial Auditing Journal, Vol. 26 No. 7, pp. 566-585. https://doi.org/10.1108/02686901111151314

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited