AOB tells audit firms to think twice before accepting more jobs
The industry watchdog reminded audit firms about this in its 2011 annual report released yesterday.
"We would like to reiterate the need for audit firms to reconsider their capability in respect of time and resources before accepting further audit engagements," it said.
The AOB noted that while some audit firms have tried to spread the workload of their partners, statistics gathered during its inspection of these firms last year revealed insufficient time charged by partners.
The concentration of audits with similar financial year-end added to the concern about the workload of partners, the AOB said.
Audit firms last year continued to voice concern about the relatively low audit fees in Malaysia, although generally, the AOB observed marginal increments in the fee level.
"The increase, however, may not be sufficient to cover the general rise in salary costs due to greater competition for talent in Malaysia," it noted.
In 2011, the AOB - set up in April 2010 by the Securities Commission (SC) to oversee the auditors of public-listed companies (PLC) - conducted inspections on 17 audit firms which audit over 98 per cent of the market capitalisation of PLCs, or 86 per cent of the total number of PLCs.
It noted that audit firms are responding to the findings of inspections by implementing remediation plans to improve the overall quality of their audit work.
"While the auditing framework remains strong and all international standards are adopted, the findings from the AOB oversight activities suggest that more efforts are required to enhance audit quality," its executive chairman Nik Hasyudeen Yusoff said in a statement issued by the SC.
This year, the AOB's audit inspection will continue to be on audit work of high-risk areas, which include fair value, the evaluation of going concern, revenue recognition, segmental reporting and compliance with ethical standards.
It said emphasis will be placed on key areas of judgment and the application of professional scepticism.
Effective 2012, Malaysia officially joined over 100 countries in adopting the International Financial Reporting Standards as the reporting standard for PLCs.
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