KUALA LUMPUR: The Audit Oversight Board (AOB) has reprimanded four auditors for failing to discharge their professional duties as set out in the International Standards on Auditing.
One of them was also fined RM5,000 for breaching the by-laws of the Malaysian Institute of Accountants (MIA) which relates to auditors’ independence.
The auditors had failed to perform audit procedures as required by the said auditing standards and had in some cases merely relied on representations from their clients without further verification for their audit opinion.
AOB executive chairman Nik Hasyudeen Yusof said that the inspection process was part of AOB’s strategic approach to enhance audit quality in Malaysia and that it was important that the industry worked together with the regulator to improve the audit profession.
“While the AOB engages the industry closely to improve audit quality, we are also mindful of the need to tackle critical root causes.
“We will not hesitate to take action on any breach that impairs or is perceived to impair the independence of auditor,” he said, adding that the reprimands did not necessarily suggest that the financial statements of the affected public interest entities contained any material error nor implied weakness in their financial reporting controls.
The AOB publishes its inspection findings annually, which include key root causes that could impact audit quality, auditor’s technical incompetence, not keeping abreast with the development in accounting and auditing standards, as well as failure to exercise professional scepticism in various occasions.
“Audit firms need to invest in the right resources and infrastructure to support high quality audit practices. The firms also should put in place effective monitoring control framework and a strong self-governance culture to ensure consistency of audit performance,” he said in a press release issued by the Securities Commission yesterday.
AOB was set up in April 2010 to promote confidence in the quality and reliability of audited financial statements of public-interest entities. It conducts yearly inspections to ensure that audit firms comply with requirements of the International Standards on Auditing and the relevant MIA By-laws.