1. What is the scope of AOB’s inspection?
Section 31V of the SCA provides that the AOB shall, from time to time, conduct inspections to assess –
(a) the degree of compliance with the auditing and ethical standards by an auditor; and
(b) the sufficiency and appropriateness of the audit evidence obtained in relation to the audit report prepared by an auditor relating to the audited financial statements of public interest entities or schedule funds.
2. What are the types of inspection that are conducted by the AOB?
The AOB may inspect auditors via a regular inspection program or a special inspection program. 

A regular inspection is conducted with a focus on high risk areas and generally considers the possible impact of the audit firm or auditor’s quality of audit that would affect the confidence of the market and investors. A special inspection is usually driven by specific concerns, either by events or industry issues that may pose a risk to investor protection or raise concerns over the quality and reliability of the related audited financial statements.

A special inspection usually covers specific aspects of an audit with greater depth and detail as compared to a regular inspection.

Further, an AOB inspection may be carried out at either the firm review level or at the engagement review level or both. A firm review focuses on the review of an audit firm’s quality control systems and practices and the degree of compliance with the requirement of the International Standards of Quality Control 1 (“ISQC 1″). An engagement review on the other hand aims to assess the degree of compliance with auditing and ethical standards of an audit engagement conducted by an auditor.

3. Will the audit firm be notified by the AOB before an inspection is carried out?
The AOB will endeavour to notify the audit firm in writing 21 working days before an upcoming regular inspection, stating the purpose and timing of the inspection. Notwithstanding that, the AOB may not give any notice period for an inspection that requires immediate action due to significant impact on public interest.
4. What is the inspection approach of the AOB?
The AOB adopts a risk based approach to inspection which is the basis of the AOB’s inspection plan. In this respect, the AOB will only review certain aspects of the firm’s quality control policies and procedures or audit engagements which AOB considers as significant according to the inspection plan of the AOB.
5. Who will be conducting the inspections?
Section 31V(2) of the SCA provides that inspections shall be carried out by any officers of the AOB or any person authorized by the AOB who is referred to as an “Inspection Officer”.
6. What are the obligations of the audit firm during inspections conducted by the AOB?
Section 31V(3) of the SCA provides that the audit firm, its partners and employees shall cooperate with an Inspection Officer who is conducting an inspection, in the following matters –
(a) providing access to all books, accounts, working paper or other related documents;
(b) furnishing copies of or extracts from such books, accounts, working papers or other related documents; and
(c) providing information by oral interview, in writing or in any other manner as may be determined or required by an Inspection Officer.
7. What is the process undertaken by the AOB in finalising the Inspection Report?
At the conclusion of the inspection, the Inspection Officer shall prepare a draft inspection report and a copy of the draft report shall be extended to the audit firm. Thereafter, the audit firm would be given 10 working days to provide its written responses to the draft inspection report. After taking into account the written responses from the audit firm, the draft inspection report shall be finalised.
8. What further actions would be required from the audit firm upon receiving the final inspection report?
The audit firm is required to identify the actual root causes to all the findings identified by the AOB and put in place the relevant remedial measures to address the root causes. 

The audit firm should provide its remedial action plan within 21 working days from the date of the final inspection report. The AOB will closely monitor the implementation of the audit firm’s remedial action plan.   On a quarterly period, the audit firm is required to provide an update to the AOB on the progress of their remedial action plan.