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Audit Oversight Board Annual Report 2023

Fostering high quality independent auditing to promote confidence in the quality and reliability of audited financial statements of public-interest entities and schedule funds in Malaysia.

CHAIRMAN’S MESSAGE

The recognition received from the CG Watch 2023 reinforces the AOB’s position as a trusted and respected audit
regulator in the region. This recognition would not have been possible without the steadfast leadership of all our
board members and unwavering commitment of our manageme𓂃nt team to uphold audit quality.

Highlights

KEY HIGHLIGHTS OF THE AUDIT OVERSIGHT BOARD’S CORE FUNCTIONS IN 2023

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REGISTRATION
REINFORCING REGULATORY EXPECTATIONS

  • Introduced Guidelines on Continuing Obligations for Registered Auditors to ensure better monitoring and supervision of registered auditors
  • Issued AOB Alerts to Audit Committees (ACs) on audit quality related matters to assist the ACs with their oversight responsibilities on auditors
  • Registered and recognised 34 new individual auditors, 1 new audit firm and 1 new foreign individual auditors
  • Strengthened the financial reporting ecosystem through the AOB’s Conversation series with Auditors, ACs and Investors
  • Built capacity and capabilities of AOB-registered auditors by facilitating targeted training programmes

INSPECTION
STRENGTHENING THE FOCUS ON RISK-BASED INSPECTIONS

  • Inspected 15 audit firms, 50 partners and 50 audit engagements 
  • 22 referral cases were closed off

ENFORCEMENT
FOCUSED AND IMPACTFUL ENFORCEMENT OUTCOMES

  • Setting the tone for quality through enforcement actions – 3 audit partners were reprimanded, prohibited to accept publicinterest entities (PIEs) and schedule fund audit clients and a total of RM75,000 monetary penalty imposed
  • Enhancing transparency in communication – additional information on enforcement actions provided in the press releases to facilitate better understanding of the breaches and justification of sanctions imposed

RM905.5
billion
RM519.5
billion
RM4.8
billion
RM39.3
billion
345
Registered individual auditors
12
Recognised individual auditors
41
Registered and recognised audit firms
Audited
1,203
PIEs
RM1,718
billion market capitalisation
Audited
1,203
schedule funds
RM716
billion NAV
Malaysia Ranked First in the Category of Auditors and Audit Regulators in CG Watch 2023

Malaysia continued to rank first for quality of auditors and audit regulators in the Corporate Governance (CG) Watch 2023 issued by the Asian Corporate Governance Association (ACGA). This marks the third consecutive assessment that Malaysia holds the title, with an increase of six points from the previous score.
The CG Watch 2023 is the result of a biennial survey by the ACGA and CLSA Ltd of 12 Asian countries including Australia. The countries are assessed on categories such as government and public governance, enforcement, corporate governance rules, investors and auditors as well as audit regulators. Malaysia’s score of 92 in the category of auditor and audit regulators was well above the average score of 74 by the 12 regional markets.
The ranking is a recognition of the AOB’s efforts and effectiveness of the audit oversight framework in Malaysia.
Profile of the AOB’s Registered and Recognised Audit Firms and Individual Auditors as at
31 December 2023
374
Registered
 individual auditors
13
Recognised
individual auditors
41
Registered and recognised audit firms
Audited
1,256
PIEs
RM1,744
BILLION
Public-listed companies (PLCs)
market capitalisation
Audited
1,399
SCHEDULE FUNDS
RM696
BILLION
Net Asset Value (NAV)

Monitoring and Supervision of PIE and Schedule Fund Auditors

Registration and Recognition of Audit Firms and Individual Auditors

The AOB’s oversight over auditors of PIEs and schedule funds are done through its registration, inspection and
enforcement functions.

The AOB has registered and recognised 41 audit firms and 387 registered and recognised individual auditors.

Stakeholder Engagement and Capacity-Building Initiatives

Engagement and Conversation on Audit Quality


Proactive engagements with key stakeholders including auditors, preparers of financial statements, audit committees,
investors and fellow regulators are important to promote high quality financial reporting and audit practices. These
engagements help the AOB to better understand the needs and expectations of these stakeholders and align efforts for
maximum impact.

Support Adoption and Implementation of Standards

Development and Implementation of Standards and Regulations

Development of accounting and auditing standards and their ensuing implementation are critical to raise the bar on audit quality.

In line with its efforts to influence audit quality by strengthening the accounting profession, the AOB participates as an observer in meetings held by the Auditing and Assurance Standards Board (AASB) and the Ethics Standards Board
(ESB) of the Malaysian Institute of Accountants (MIA).

The AOB helps to bridge the gap between the industry and profession in understanding different challenges arising from current accounting and auditing issues, and also contribute its views on areas of concern.

Statements

Statements from members of the Audit Oversight Board and financial statements for the financial year ended 31 December 2023

The Board of the AOB comprises a Non-Executive Chairman, an Executive Officer, and five other Non-Executive
Members who are appointed by the SC. The Non-Executive Members are representatives from the regulators, namely
BNM and SSM, the legal profession, accounting profession and the private sector. The Executive Officer is responsible
for the day-to-day administration of the AOB.

The Non-Executive Chairman of the AOB is appointed for a term not exceeding three years and the Non-Executive
Members of the Board are appointed for a term not exceeding two years. Both the Non-Executive Chairman and Non-
Executive Members are eligible for reappointment upon the completion of their term.

Others

Acronyms and Abbreviations.

Download the Report


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