“It is important to drive the message of applying professional skepticism vigorously. We cannot compromise. Auditors must ensure their audits are performed in accordance with auditing standards to ensure high quality audit,” said Nik Hasyudeen Yusof, Executive Chairman of the AOB.

“This means that audit firms have to regularly review their systems, processes and training programmes to ensure their teams are well equipped and conversion to deliver the quality of work as set by the ISA. The demands and requirements of auditing and financial reporting standards should not be underestimated. At the end, auditors must form their opinion based on sufficient and appropriate audit evidence. This is the substance which the AOB considers when it inspects audit engagements,” he added.

The AOB, set up in April 2010 by the Securities Commission Malaysia to promote confidence in the quality and reliability of audited financial statements of public-interest entities, conducts yearly inspection to ensure audit firms comply with requirements of the International Standards on Auditing and the relevant MIA By-laws. It publishes its inspection findings annually which includes key root causes which could impact audit quality.

The enforcement action does not necessarily suggest that the financial statements of the affected public interest entities contained any material error or their financial reporting controls are weak. Further details on AOB enforcement action can be found here.