Engagements and Conversations 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.

The AOB’s Capacity Building and Collaboration Efforts in 2023

Maintaining Consistency on Audit Oversight among Fellow Regulators

The AOB continues to be involved at both global and regional levels through its membership with the International
Forum of Independent Audit Regulators (IFIAR) and the ASEAN Audit Regulators Group (AARG). Mutual sharing of
valuable insights on regulatory best practices promotes greater consistency on audit oversight among fellow audit
regulators.

IFIAR and AARG annual workshops and plenary meetings provide an opportunity to –

gain deeper insights into current regulatory regimes globally and regionally;
share inspection techniques; and
discuss common findings.

It also serves as a platform for regulators to engage with global and regional leadership of the six Global Public Policy
Committee (GPPC) firms on audit quality issues and initiatives.

Key IFIAR and AARG Sessions Held in 2023

GLOBAL

IFIAR’s 17th Inspection Workshop

Hosted by PPPK Indonesia, the workshop was held in Bali from 7 to 9 March 2023. The AOB’s Inspection officers attended the workshop with more than 45 attendees from 39 jurisdictions. Topics discussed included:

Global trends and possible implications to audit regulators arising from environmental, social, and governance (ESG) reporting and assurance
Inspection approaches and challenges in relation to the new IQSM
Inspections of bank audits and IT audits

IFIAR’s 2023 Plenary Meeting

Held in Washington DC from 25 to 27 April 2023, the session was attended by members, observers, and other key stakeholders from 44 IFIAR Member jurisdictions. Discussions focused on:

Key developments and emerging trends in the audit industry including
progression of audit quality
Emerging requirements over sustainability reporting and assurance
Concerns over the attractiveness of the profession

REGIONAL

AARG Workshop

Hosted by ACRA Singapore from 25 to 27 September 2023, it was the first face-to-face workshop since 2019. AARG member countries (ACRA Singapore, AOB Malaysia, SEC Thailand, PPPK Indonesia and SEC Philippines) together with non-AARG members, i.e. Cambodia and Hong Kong, took this opportunity to share knowledge and experience on audit regulation, inspection and enforcement.

Promoting Effective Oversight of Auditors and the Audit Process

Audit Committees (ACs) play an important role in the financial reporting process through their oversight of auditors and the audit process. Effective oversight by strong, knowledgeable, and independent ACs are important to enhance audit quality.

The AOB’s Conversation with ACs is a platform to share the AOB’s oversight activities and observations on the quality of audit. The session covered the financial reporting implications of climate-related matters. There were discussions on the disclosure of climate-related risks and its potential impact on the financial statements of PLCs. Examples of the potential impact to the financial statements of specific industries such as banking, agriculture and real estate was also shared with the ACs. ACs were urged to ensure that there are adequate governance structures in place to monitor climate-related matters and engage management and auditors in a timely manner.

In November 2023, the first AOB Alert for ACs was issued. The aim of the AOB Alert is to–

provide updates on AOB efforts to promote audit quality and key development affecting the financial reporting ecosystem; and
facilitate the ACs to have meaningful conversation with key stakeholders.

The AOB’s Conversations with ACs and AOB Alerts are designed to ensure that ACs are sufficiently informed on the relevant information to effectively carry out their oversight responsibilities.

Read the AOB Alert at https://www.sc.com.my/aob/aob-alert

Engaging the Leadership of the Audit Firms

Engagements with the leadership of the AOB-registered audit firms enable the AOB to support quality audit work.
These engagements provide a platform for the AOB to listen to the views and challenges faced by auditors and to make
decisions if any regulatory intervention is required. Areas of discussion included inspection findings, observations, and
regulatory updates.

Seeking Input from Investors and other Stakeholders

In addition to being a member of IFIAR, the AOB also serves in IFIAR’s Investor and Other Stakeholders Working Group (IOSWG). Involvement in the IOSWG provides the AOB with an avenue to understand investors and other stakeholders’ expectations of auditors and audit regulators.

The AOB has been leveraging the experience and knowledge from other jurisdictions on matters relating to investor
protection and improving audit quality. Earlier this year, as part of IOSWG’s consultation, the AOB sought feedback on
stakeholders’ assumptions for reasons behind audit failures. The feedback will assist the IOSWG to design activities to
improve audit quality.

In this regard, the inaugural engagement with the members of the IICM was held on 23 November 2023 to seek views from the investor group on matters regarding auditors and audit quality.

The session was attended by representatives of some of the largest institutional investors in Malaysia such as Employees Provident Fund, Kumpulan Wang Persaraan (Diperbadankan), Lembaga Tabung Angkatan Tentera and Lembaga Tabung Haji.