|1.||Why is there a need to establish the Audit Oversight Board (AOB)?|
|The assurance function preformed by external auditors on company’s financial statements has long played an important role in the corporate governance framework. The collapse of large firms and news of fraud involving globally recognised firms over the years have raised concerns regarding the credibility of audited financial statements.
A strong corporate governance framework requires providing the necessary assurance on the rigour of the audit process and the quality and reliability of audited financial statements. Towards this objective, we have invested considerable effort to establish the Audit Oversight Board (AOB) to provide independent audit oversight over public interest entities and to ensure our regulatory framework for auditors is on par with international standards.
|2.||How did the SC formulate the audit oversight framework?|
|A High Level Task Force on audit oversight was established, comprising representatives from the Malaysian Institute of Accountants (MIA), the Malaysian Institute of Certified Public Accountants (MICPA), Bank Negara Malaysia (BNM), Bursa Malaysia and the business community.
The High Level Task force was of the view that independent oversight over auditors is key to restoring and strengthening investors’ confidence in the audit profession and in ensuring the reliability of the audited financial statements.
The Securities Commission Amendment Act 2010 (SCA) embodies the recommendations of the High Level Task force. The SCA will seek to promote the growth of the Malaysian audit profession with governance.
|3.||Where are the AOB provisions contained in?|
|Part IIIA of the SCA contains provisions regarding the establishment and responsibilities of the AOB.|
|4.||What is the mission of AOB?|
|The AOB’s mission is to oversee the auditors of public-interest entities (PIE) and to protect the interests of investors by promoting confidence in the quality and reliability of audited financial statements of PIEs.|
|5.||Is AOB a statutory body?|
|No, the AOB is not a statutory body. However, the AOB is established under the auspices of the SC, and the SC will remain accountable for all of the AOB’s acts and omissions.|
|6.||What are the key responsibilities of the AOB?|
|Part IIIA of the SCA provides that the AOB, in assisting the SC in discharging its audit oversight functions is responsible to-
|7.||Who are Public-interest Entities (PIEs)?|
|PIEs refer to those entities that are currently specified under Schedule 1 of the SCA. They include-
|8.||Are private companies (Sdn Bhd), partnerships and sole proprietorship PIEs?|
|No, they are not unless they fall within any of the seven entities that are specified under Schedule 1 of the SCA. Hence, for example if the private company (Sdn Bhd) is a holder of a Capital Markets and Services Licence who carries on the business of fund management, the private company will be regarded as a PIE.|
|9.||If I register with AOB, do I still need to be an approved auditor under section 8 of the Companies Act 1965?|
|Yes, because one of the criteria for registration with the AOB is to be an approved auditor under section 8 of the Companies Act 1965.|
|10.||How will AOB work with other regulatory authorities?|
|AOB will work closely with all regulatory agencies, such as BNM and Suruhanjaya Syarikat Malaysia (SSM), to ensure a holistic regulatory framework for auditors in Malaysia, which in turn promotes the growth of the audit profession with good governance.|
|11.||Does the establishment of the AOB mean that the Malaysian Institute of Accountants (MIA) will have no role to play in providing oversight over auditors and specifically over auditors of PIEs?|
|No, the MIA will still have a critical role to play in the oversight of auditors including auditors of PIEs. This is because-
|12.||When is Part IIIA of the SCA expected to come into force?|
|Part IIIA of the SCA is expected to come into force on 1 April 2010.|
|13.||Does this mean that the AOB will begin to undertake all its responsibilities as described in Question 6 from 1 April 2010?|
|The AOB will commence operation on 1 April 2010. Its primary focus as of 1 April 2010 will be to register individual auditors and audit firms that wish to audit the financial statements of a PIE.|