Page 12 - Inspection Report 2018

The AOB observed that there was a continuing Chart 2
trend of PIEs that opted for smaller audit firms 4-year movement of PIE audit clients
to serve their needs, moving from the Major Audit clients’ movement from Other to
Audit Firms to Other Audit Firms as well as from 35 Major Audit Firms
larger to smaller Other Audit Firms. Audit clients’ movement from Major to
30
7 Other Audit Firms
With the increasing complexity of PIE audits and 25
global nature of the business environment as well
as strengthened requirements in auditing and No. of PIE audit clients 20 6 6
ethical standards, sufficient capacity of the audit 15 25
firms is of paramount importance in upholding 3 40
audit quality. Thus, the AOB embarked on an 10 17 17
in-depth review of its existing registration 5 12
criteria in 2018, focusing on registered audit 30
firms’ capacity building efforts over the last
eight years and their current level of capacity 2015 2016 2017 2018 Ratio 20
to carry out audits of PIEs and schedule funds. Source: AOB

Key findings were shared with the audit profession who discussed and agreed on the best way forward towards 10
improving audit quality in Malaysia. Their views were incorporated into the New Criteria for Registration with
the AOB which are detailed in the AOB’s Annual Report 2018.
0

CAPACITy BuILdING EFFOrTS

Talent retention especially experienced audit
Chart 3
personnel, remains the main challenge faced Audit Staff Turnover rate
by the audit profession in recent years. Audit
firms continue to execute measures and 30 Managerial
initiatives to retain their audit personnel by Non-Managerial
offering competitive remuneration, improving Overall
staff benefits, developing coaching cultures to 28
encourage closer working relationship between 28
management and staff as well as enhancing 26
resource planning for better management of Percentage
the staff’s workload. 24
24 24 23
The overall staff turnover rate increased in 22
2018 as compared to 2017. Given that high 22 22 22 22 22
staff turnover is commonplace in the audit 20
profession, the AOB is cognisant that such 2016 2017 2018
a challenge could compromise the auditors’
ability to maintain audit quality. Source: AOB Analysis – Top 10 Audit Firms in Malaysia

AUDIT OVERSIGHT BOARD
10 ANNUAL INSPECTION REPORT 2018

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