AUDIT OVERSIGHT BOARD

AUDITING AND INVESTIGATION

(PAS3143)

LEONG SZE KEAT

4123000451
NUR NAJWA ASYIQIN BT AHMAD YAZID 4123008721
NURUL SYUHADA BINTI ZAINUDDIN 4123009901
MOHD. SAZMAN MOHD ZIN JAMAL 4123004521
MUHAMMAD ANIQ HAKIM BIN MAZLAN 4131008151

What is AOB?
Stands for Audit Oversight Board
Was established under Part IIIA of the Securities
Commission Act 1993 1st April 2010
Purpose is:
To promote and develop an effective audit oversight
framework
To promote confidence in the quality and reliability of audited
financial statements in Malaysia.

What is AOB?
AOB is not a statutory body
Securities Commission would remain accountable
for all of the AOB's acts and omissions
AOB would also work closely with all regulatory
agencies to ensure a holistic regulatory
framework for auditors in Malaysia

AOBs members
The Board consists of:
An executive chairman
6 non-executive members

To maintain independence of the AOB, not more

than 2 non-executive of Board are members of
Malaysia Institute of Accountants (MIA)

Standard setting of AOB

Compliance with established auditing standards is an
integral aspect in maintaining reliability of the
companys audited financial statements.
As Malaysian Institute of Accountants (MIA) adopts
all Internal Federal of Accountants (IFAC)
standards, AOB will have power to direct MIA to
establish, amend, modify or alter its prescribed
standards if the need should arise.
Currently auditing and ethical standards in Malaysia
are on par with pronouncements issued by
International Auditing and Assurance Standard Board
(IAASB) and International Ethics Standard Board for
Accountants (IESBA).

The structure of AOB

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
The members are appointed by the Securities
Commission

The Members of AOB

Name

Designation

Nik Mohd Hasyudeen

Yusof

Executive Chairman of the Audit Oversight Board

Goh Ching Yin

Executive Director of the Securities Commission

Malaysia

Datuk Nor Shamsiah

Mohd Yunus

Deputy Governor of the Central Bank of Malaysia

Cheong Kee Fong

Advocate and Solicitor of Cheong Kee Fong & Co

Chok Kwee Bee

Managing Director of Teak Capital Sdn Bhd

Dato Gumuri Hussain

Chairman of the SME Bank

Mohd Naim Daruwish

Chief Executive Officer of the Companies

Commission Malaysia

Overview strategies of the AOB

The AOB aims to achieve the following desire outcomes:
High quality financial reporting practices by Public Interest Entities (PIEs)
Resourceful and high quality audit practices
Independent and high quality audits
High quality and reliable audited financial statements
Enhanced confidence in audited financial statements.

The AOB has adopted a strategic framework which links the service areas
and activities of AOB to the desired outcomes which manifest the
attainment of its mission. The strategic framework has four strategic
themes, which are:
Support adoption and implementation of standards
Promote high quality audit practices
Influence financial reporting ecosystem
Leverage on stakeholders support.

POWER OF AOB

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
Regulate auditors of Public Interest Entities
(PIE)
The AOB was established to assist SC in
discharging the above functions

RESPONSIBILITIES OF AOB
Register auditing of PIEs
Adopt auditing/ ethical standard of MIA
Conduct inspection & monitoring programmers
Conduct inquiries and imposed sanctions
Cooperate with relevant authorities and other
oversight bodies outside Malaysia

Registration

AOB seeks to register audit firms and individual

auditors of public interest entities (PIEs) who are fit

and proper which includes:
i)Auditor approved under Sect.8 of the Companies
Act
ii)Not convicted of an offence involving fraud and
dishonesty
iii) Not a bankrupt
iv) Not engaged in practices with reflect discredit in
meeting professional standards
As at 31 October 2010, 77 audit firms and 289
auditors have been registered

Registration process
PIE Category

Number of PIEs as at 30 June

2010

Public Listed Companies

972

Licensed Financial Institutions

36

Insurance Companies

47

Takaful Operators

13

Islamic Banks

19

Development Financial Institution

Capital Market Services Licensed

Holders

137

Inspection process
The AOB will conduct regular and special inspections of
audit firms and auditors determined on a risk-based
approach
Audit firms auditing high number of PIEs will be inspected
annually while the rest will be inspected within 3 years
Regular inspections are routine inspection to cover all
firms based on AOBs annual audit plan
Special inspections are industry or event-driven

At the firm level,

compliance with
Implementing the
International Standard
on Quality Control
1(ISQC1) and the MIA
By-Laws on Professional
Ethics, Conduct and
Practice will be
reviewed:

Leadership and
responsibilities within
firm
Ethical requirements
Acceptance and
continuance of audit
clients
Human resources
Engagement
performance
Monitoring

At the engagement
level , inspection is
targeted at compliance
with International
Standard on Auditing
This includes:

Audit planning
Risk assessment and
risk response
Sufficiency and
appropriateness of
audit evidence
Documentation
Compliance with
regulation

 At the end of the inspection process,

AOB will provide the firms with

inspection reports which indicate
areas where firms failed to comply
with auditing and ethical standards
Firms are expected to provide AOB
with their plans to remediate the noncompliances
Not with standing the remediation,
further action could be taken by the
AOB

Inquiry and Sanctions

Inquiry conducted
when there is reason to
believe that provisions
of the Act, written
notice or guidelines are
breached, including
non-compliance with
auditing and ethical
standards

AOB officers will be

conducting inquiries
Inquiry officers will be
appointed and will have
necessary power to
coduct their duties

International
affairs
AOB has been accepted as a member of
International Forum of Independence Audit
Regulations (IFIAR)

Have liaised with audit regulators in

Singapore, Australia, France and United
Kingdom to benchmark against our current
practices and understand their challenges
AOB will develop closer relationship with audit
regulators where Malaysian businesses have
significant presence

Annual reporting

3 months after the end of the year,

AOB shall report to the Securities
Commission on:
Assessment on the effectiveness of AOBs
performance
Assessment on risk relating to quality and
reliability of audited financial statements of PIE
and measures recommended by AOB
Systems , procedures and practices used by
AOB in measuring its performance
Other matters affecting the AOB in carrying
out its functions

Example where
AOB has exercised
its power

THE NEWS FROM THE

SUN DAILY
POSTED ON 19 FEBRUARY 2014 05:40AM

Summary

Lim Kok Beng of Ong Boon Bah & Co

Chan Kee Hwa of Khoo Wong & Chan
Failing to comply with the International
Standards on Auditing (ISAs).
Found to have breached the registered
conditions imposed by the AOB under
section 310(4) of the Securities
Commission Act 1993.
Monetary penalty of RM10,000 was
imposed on Lim.

THE NEWS FROM THE

SUN DAILY
POSTED ON 3 JUNE 2014 - 05:40AM

Summary

Firm Wong Weng Foo & Co for two separate

offences.
Slapped a RM30,000
AOB has prohibited the firm from accepting public
interest entities (PIEs) as clients for 12 months
Failing to comply with Section 31N (1) of the
Securities Commission Act 1993 which requires
audit firms to be registered with the AOB when
acting as auditors of PIE.
Failed to comply with the Malaysian Institute of
Accountants By-Law (On Professional Ethics,
Conduct and Practice) which deals with

THE NEWS FROM THE

SUN DAILY
POSTED ON 20 AUGUST 2013 - 05:36AM

Summary
Reprimanded four auditors
Failing to discharge their professional duties as
set out in the International Standards on Auditing
One of the auditors was also fined RM5,000
Breaching the by-laws of the Malaysian Institute of
Accountants (MIA) which relates to auditors'
independence.