The principle of proportionality, efficiency and achieving the desired outcome continue to be essential to the strategic enforcement approach adopted by AOB. In determining the type of sanction that is imposed on any contravention or breach, AOB takes into account the nature and seriousness of the offences, previous regulatory record and other aggravating and mitigating factors. Among the matters considered by AOB is the impact of the contravention on the integrity of the profession, the capital market as a whole and the impact of the breach on the confidence and reliability of audited financial statements of the PIE in question.
The sanctions are:
- Directing the person in breach to comply with the provisions of Part IIIA of the SCA or any condition, written notice or guidelines;
- Requiring professional education to be undertaken;
- Assigning a reviewer to oversee an audit that is undertaken by the auditor concerned;
- Financial penalty of not exceeding RM500,000;
- Prohibit the person concerned from accepting any public interest entity or schedule fund as its clients or preparing reports in relation to financial information of any public interest entity or schedule fund, as may be required under the securities laws or guidelines issued by the Commission, for a period not exceeding twelve months; and
- Prohibit the person concerned from auditing financial statements or preparing reports in relation to financial information of a public interest entity or schedule fund, as may be required under the securities laws or guidelines issued by the Commission, for a period not exceeding twelve months or permanently.
The focus of AOB enforcement is whether the auditors comply with the recognised auditing and ethical standards. Such action from the AOB may not necessary imply the audited financial statement does not give a true and fair view.