Annually, the AOB inspects nine Major Audit Firms, which collectively audit 78% of the total number of Public-Listed Companies (PLCs), representing 95% of
the total market capitalisation of PLCs in Malaysia.

The nine Major Audit Firms also collectively audit 1,188 schedule funds (SF) with a net asset value (NAV) of RM675 billion, representing 97% of total NAV of
SF in Malaysia.

The AOB’s inspection in 2023 includes assessments of 50 partners and 50 audit engagements across 15 audit firms, including the nine Major Audit Firms.

There was a slight improvement in auditors’ performance in 2023 based on the inspection results of the AOB. The AOB noted a decrease in the percentage of inspected engagements routed for enforcement, to 16% in 2023 from 18% in 2022.

However, there was an overall increase in engagements requiring specific remediation measures, a matter that the AOB is closely monitoring. These measures, imposed on audit firms and engagement partners, are intended to drive improvements in the areas of auditor’s professional skepticism and technical expertise
in relevant auditing and accounting standards.

Audit firms are urged to intensify their efforts to achieve consistent performance across all PIE audit engagements.

The report also highlighted the importance of developing talent and addressing staff workload concerns to uphold consistently high-quality audits.

With audit quality being a shared responsibility, the AOB continues to work together with key stakeholders to drive improvements in the financial reporting ecosystem.

The effectiveness of these efforts is highlighted by Malaysia’s top ranking in the Asian Corporate Governance Association (ACGA) CG Watch for the category of Auditors and Audit Regulators for three consecutive assessments, including in 2023.

It was quoted that Malaysia led in this category due to its scores for audit oversight, capacity building and enforcement. AOB was also credited for providing good disclosure of its activities, including inspections and enforcement data, descriptions and outcome.

The AOB’s Annual Inspection Report 2023 is available here.