PETALING JAYA: The Audit Oversight Board (AOB) of the Malaysian Securities Commission on Thursday urged auditors to be more vigilant and diligent in carrying out their duties during the current period of economic uncertainties due to the Covid pandemic. 19.
In its 2020 annual inspection report, the AOB noted that it is the responsibility of the directors and the audit committee to assess a company’s ability to continue as a going concern when preparing financial statements. This responsibility extends to ensuring the disclosure of important judgments rendered in order to reach these conclusions.
The auditors are then required to verify and contest the appropriateness of the going concern assumptions, as well as the adequacy of the information to be provided. Due to the prolonged uncertainties arising from the pandemic, it is even more important now that auditors exercise appropriate professional skepticism in the conduct of their audits.
The AOB Annual Inspection Report 2020 includes highlights on new and revised auditing standards for the Firm’s Quality Management System which are due to be implemented by December 15, 2022. Firms auditors are encouraged to take the necessary steps to implement these standards by the due date.
The introduction and implementation of the annual transparency report in 2021 would require eight AOB-registered audit firms that meet the reporting criteria to share their transparency reports with the audit committees of their clients of the entities of the company. public interest (PIE).
Eligible audit firms are required to disclose information relating to their legal and governance structures, measures to maintain audit quality and manage risk, as well as measures of audit quality indicators. . In 2022, eligible audit firms will also be required to publish their annual transparency report to the public.
PIE audit committees must take into account the information presented in the annual transparency reports when deciding on the appointment and renewal of their auditors.
AOB’s 2020 annual inspection report also provides an overview of the findings of its inspections during the year 2020. It also provides observations on the impact of Covid-19 on the financial results of listed companies. , including information in annual reports and audited financial statements. (AFS). A total of 38 audit firms and 339 auditors are currently registered with AOB.
In 2020, AOB inspected 10 audit firms and carried out monitoring and thematic reviews on four other audit firms. The thematic monitoring and review program included a follow-up assessment of the corrective actions taken to address the findings of previous AOB inspections, including the assessment of the results of the companies internal oversight review and thematic reviews. on specific areas of concern. In this regard, the 2020 inspection and review covered firms that collectively audit 72.6% of the total number of PIEs.
The AOB observed a significant increase in the percentage of audit engagements requiring further assessment and investigation, from 44% in 2019 to 88% in 2020.
Going forward, AOB will continue to work closely with various stakeholders to maintain high audit quality in Malaysia to improve the financial reporting ecosystem.
As audit firms take steps to maintain audit quality in these difficult times, directors and audit committees are also reminded of the need to be vigilant in managing the growing spectrum. problems and risks, especially those related to the complexities of financial reporting caused by Covid-19.
Ongoing engagements with their auditors are essential to manage these issues on an ongoing basis. AOB also urges audit firms to invest in an adequate level of training and resources to ensure that high quality audits are performed at all times.