Post on 13-Jan-2016
© Securities Commission, Malaysia
1
What the What the Audit Oversight Board Audit Oversight Board
will dowill do
ICAA-MICPA Audit Forum3 August 2010
© Securities Commission, Malaysia
Financial Reporting Ecosystem
Domestic Commerci
al transactio
ns / results
Directors and
management
Financial reporting function
Internal audit
function
External auditors
Financialstatement
s
Audit Oversight Board
Malaysian Institute of Accountant
s
Companies Commissio
n
Securities Commissio
n
Bank Negara
Malaysia
Ministry of Finance
Other experts: Valuers,
Actuarists,Lawyers
Foreign Commerci
al transactio
ns / results
Malaysian Accountin
g Standards
Board
Bursa Malaysia
© Securities Commission, Malaysia
Drivers of financial statement quality
FinancialStatemen
ts
Reporting entities
Corporate governance
practices
Reporting function competency
Financial reporting infrastructure
Reporting regulation and
standards
Appropriateness, clarity and simplicity
Availability of guidance when
necessary Auditors
Firm level quality control & risk management
Application of standards in
engagementsUsers
Knowledgeable
Context of usage
Professionalism and business
principles
© Securities Commission, Malaysia
4
About the Audit Oversight Board
• The Securities Commission has the function to (S31B):
• Promote and develop an effective and robust audit oversight framework in Malaysia:
• Promote confidence in the quality and reliability of audited financial statements in Malaysia: and
• Regulate auditors of Public Interest Entities (PIE)
© Securities Commission, Malaysia
5
About the Audit Oversight Board
• Among the responsibilities of the AOB are:
• Implement policies and programmes in ensuring an effective audit oversight system
• Register auditors of PIE• Conduct inspections and monitoring
programmes• Conduct inquiries and impose appropriate
sanctions• Cooperate and liaise with relevant
authorities and relevant oversight bodies in Malaysia and internationally
© Securities Commission, Malaysia
“Promoting confidence in the quality and reliability of audited financial statements of public interest entities in Malaysia through having effective and robust regulation and audit oversight”
Outcomes
Strategic Themes
Services Areas
Confidence in audited financial
statements
High quality and reliable audited
financial statements
High quality financial reporting
practices
Standards setting and guidance
Registration
Inspection and Inquiry
Collaboration and cooperation
Promotion of quality practices
Support adoption and implementation of standards
Promote high quality audit practices
Influence financial reporting ecosystem
Leverage on stakeholders support
Diagram 1
Resourceful and high quality audit
practices
Independent and high quality audit
© Securities Commission, Malaysia
7
About the Audit Oversight Board
• The Audit Oversight Board (AOB) became operational from 1 April 2010
• The AOB consists of:• An executive chairman• 6 non-executive members
• Not more than 2 non-executive members of the AOB shall be members of the Malaysian Institute of Accountants
© Securities Commission, Malaysia
Compliance with established auditing and ethical standards benchmark against international best practices is an integral aspect in ensuring audit quality
The AOB expects the accountancy profession to adopt all IFAC standards. The power to direct MIA to establish, amend, modify or alter its prescribed standards will only be exercised if there is a gap in the scope and timing of the adoption
Standard setting
© Securities Commission, Malaysia
9
Registration process
• AOB seeks to register audit firms and individual auditors of public interest entities (PIEs) who are fit and proper which includes (S31P):• Auditor approved under S8 of the CA• Not convicted of an offence involving fraud
and dishonesty• Not a bankrupt• Not engaged in practices with reflect
discredit in meeting professional standards
© Securities Commission, Malaysia
10
Inspection process
• The AOB will conduct annual inspection of audit firms
• The audited financial statements will be monitored and when necessary, auditors and their audit work will be inspected
• Firms and engagements will be inspected based on a risk-based approach
• Audit firms auditing high number of PIEs, for example, will be inspected annually while the rest will be inspected within 3 years
© Securities Commission, Malaysia
11
Inspection process
• Audit inspections would be conducted at the firm level and the engagement level
• At the firm level, compliance with ISQC1 will be reviewed:
• Leadership and responsibilities within firm• Ethical requirements• Acceptance and continuance of audit clients• Human resources• Engagement performance• Monitoring
© Securities Commission, Malaysia
12
Inspection process
• At the engagement level, inspection is targeted at compliance with International Standards on Auditing and relevant regulation and laws
• The performance of the Engagement Partner and the Quality Control Reviewer will be assessed
• This includes:
• Audit planning• Risk assessment and risk response• Sufficiency and appropriateness of audit
evidence• Documentation• Compliance with regulation
© Securities Commission, Malaysia
To enable effective and proportionate sanctions to be taken…
Requiring additional professional educationRequiring additional
professional education
Requiring errant auditor to comply with the Act
Requiring errant auditor to comply with the Act
CensureCensure
Monetary finesMonetary fines
Cancelling or suspension of registration
Cancelling or suspension of registration
Inquiry and Sanctions
Inquiry conducted when there is reason to believe that provisions of the Act, written notice or guidelines are breached
AOB officers will be conducting inquiries
Inquiry officers will be appointed and will have necessary powers to conduct their duties