Transcript Strategic and Operational Plan 2010-2012

What the
Audit Oversight Board
will do
ICAA-MICPA Audit Forum
3 August 2010
© Securities Commission, Malaysia
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Financial Reporting Ecosystem
Domestic
Commercial
transactions
/ results
Securities
Commission
Directors
and
management
Foreign
Commercial
transactions
/ results
Companies
Commission
Financial
reporting
function
Other
experts:
Valuers,
Actuarists,
Lawyers
Financial
statements
Ministry of
Finance
External
auditors
Malaysian
Institute of
Accountants
Bursa
Malaysia
© Securities Commission, Malaysia
Internal
audit
function
Bank
Negara
Malaysia
Malaysian
Accounting
Standards
Board
Audit
Oversight
Board
Drivers of financial statement quality
Reporting
regulation and
standards
Appropriateness,
clarity and
simplicity
Reporting entities
Availability of
guidance when
necessary
Corporate governance
practices
Reporting function
competency
Professionalism and
business principles
Financial
Statements
Firm level quality
control & risk
management
Application of
standards in
engagements
Financial reporting
infrastructure
Users
Knowledgeable
Context of usage
© Securities Commission, Malaysia
Auditors
About the Audit Oversight Board
•
The Securities Commission has the function to
(S31B):
•
Promote and develop an effective and robust audit
oversight framework in Malaysia:
•
Promote confidence in the quality and reliability of
audited financial statements in Malaysia: and
•
Regulate auditors of Public Interest Entities (PIE)
© Securities Commission, Malaysia
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About the Audit Oversight Board
•
Among the responsibilities of the AOB are:
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•
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Implement policies and programmes in ensuring
an effective audit oversight system
Register auditors of PIE
Conduct inspections and monitoring programmes
Conduct inquiries and impose appropriate
sanctions
Cooperate and liaise with relevant authorities and
relevant oversight bodies in Malaysia and
internationally
© Securities Commission, Malaysia
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Diagram 1
“Promoting confidence in the quality and reliability of audited financial statements of public interest entities in
Malaysia through having effective and robust regulation and audit oversight”
Strategic Themes
Services Areas
Outcomes
Confidence in
audited financial
statements
High quality and
reliable audited
financial statements
Support adoption and implementation of
standards
Promote high quality audit practices
Standards setting
and guidance
Registration
Inspection and
Inquiry
Independent and
high quality audit
Influence financial reporting ecosystem
Resourceful and high
quality audit
practices
High quality financial
reporting practices
© Securities Commission, Malaysia
Promotion of quality
practices
Leverage on stakeholders support
Collaboration and
cooperation
About the Audit Oversight Board
•
The Audit Oversight Board (AOB) became operational
from 1 April 2010
•
The AOB consists of:
• An executive chairman
• 6 non-executive members
•
Not more than 2 non-executive members of the AOB
shall be members of the Malaysian Institute of
Accountants
© Securities Commission, Malaysia
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Standard setting
 Compliance with established auditing and ethical
standards benchmark against international best
practices is an integral aspect in ensuring audit quality
 The AOB expects the accountancy profession to adopt
all IFAC standards. The power to direct MIA to establish,
amend, modify or alter its prescribed standards will only
be exercised if there is a gap in the scope and timing of
the adoption
© Securities Commission, Malaysia
Registration process
•
AOB seeks to register audit firms and individual
auditors of public interest entities (PIEs) who are fit
and proper which includes (S31P):
• Auditor approved under S8 of the CA
• Not convicted of an offence involving fraud and
dishonesty
• Not a bankrupt
• Not engaged in practices with reflect discredit in
meeting professional standards
© Securities Commission, Malaysia
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Inspection process
•
The AOB will conduct annual inspection of audit firms
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The audited financial statements will be monitored
and when necessary, auditors and their audit work
will be inspected
•
Firms and engagements will be inspected based on a
risk-based approach
•
Audit firms auditing high number of PIEs, for
example, will be inspected annually while the rest will
be inspected within 3 years
© Securities Commission, Malaysia
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Inspection process
•
Audit inspections would be conducted at the firm level
and the engagement level
•
At the firm level, compliance with ISQC1 will be
reviewed:
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Leadership and responsibilities within firm
Ethical requirements
Acceptance and continuance of audit clients
Human resources
Engagement performance
Monitoring
© Securities Commission, Malaysia
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Inspection process
•
At the engagement level, inspection is targeted at
compliance with International Standards on Auditing
and relevant regulation and laws
•
The performance of the Engagement Partner and the
Quality Control Reviewer will be assessed
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This includes:
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Audit planning
Risk assessment and risk response
Sufficiency and appropriateness of audit evidence
Documentation
Compliance with regulation
© Securities Commission, Malaysia
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Inquiry and Sanctions
To enable effective and proportionate sanctions to be taken…
 Inquiry conducted when
there is reason to believe
that provisions of the Act,
written notice or guidelines
are breached
 AOB
officers
will
conducting inquiries

be
Inquiry officers will be
appointed and will have
necessary powers to conduct
their duties
© Securities Commission, Malaysia
Cancelling or suspension
of registration
Monetary fines
Censure
Requiring errant auditor
to comply with the Act
Requiring additional
professional education