Audit firms must ensure better quality quality control systems

KUALA LUMPUR: Audit firms need to do more to ensure that their quality control systems are more effective, says the Audit Oversight Board (AOB). 

It said audit firms must be holistic in their approach and cover areas such as partner accountability, human resource, training and monitoring functions.

“We found that firms which maintained audit quality and professional standards were not worse off economically compared with their peers, debunking the myth that doing so is financially costly to firms. 

“This sends a clear signal that sustaining quality and upholding professional standards make good business sense and that audit firms should not compete at the expense of audit quality,” the AOB said in its 2015 annual report.

It added that audit fees continued to grow in the same trajectory as in the last few years while the pressure on salaries moderated, although the overall salary cost was still on the uptrend. 

“However, with the appropriate pricing model, audit firms would have enough margins to enable them to carry out their audit work more effectively,” it said.

In 2015, AOB inspected 12 audit firms which collectively audited 872 public interest entities covering 97% of the market capitalisation of public-listed companies. - Bernama