KUALA LUMPUR (June 2): The Securities Commission’s Audit Oversight Board (AOB) said today that it will begin publishing inspection reports of audit firms which fail to effectively remedy their weaknesses, in order to uphold audit quality and standard.

In a statement issued in conjunction with the release of its 2014 annual report, AOB said audit firms should embrace and actualise professional ethics and values as a strategy to improve audit quality.

“Audit quality is and will continue to be the principal attention for AOB. It is an important factor which influences confidence in financial statement disclosures.

“Our findings suggested efforts to improve audit quality should go beyond process improvements and training. This should include the overall strategy of competing in the market, alignment of incentive and business model of the firm,” said AOB executive chairman Nik Hasyudeen Yusoff.

“How the audit teams embrace and actualise professional ethics and values should also be the focal point. In this respect, the leadership of audit firms should set a clear tone for the rest to follow,” he added.

The AOB was set up by the Securities Commission in 2010 to oversee the auditors of public-interest entities (PIEs), protect investors’ interest and promote confidence in the quality and reliability of audited financial statements of PIEs.

Moving forward, AOB said the implementation of the New Auditor Reporting Standard is a possible game changer in the betterment of auditing and financial reporting in Malaysia.

“The new standards would require auditors to disclose Key Audit Matter[s] in their reports, leading to a more informative and tailored reporting specific to the clients’ circumstances instead of the present reporting approach consisting of standard terms and boilerplates,” it said.

The New Auditor Reporting Standard will take effect on 15 December 2016.