Page 23 - Inspection Report 2018

The AOB may inspect a registered auditor either through a regular or special inspection. A regular inspection
is conducted with a focus on high-risk areas and generally considers the possible impact that audit firm or
individual auditor’s quality have on the overall confidence of the market and investors. Regular inspections are
carried out based on an inspection plan developed via an annual risk assessment process.

A special inspection is usually driven by specific concerns, either by events or industry issues that may pose a
risk to investor protection or raise concerns over the quality and reliability of the audited financial statements.

In 2018, the AOB conducted regular inspections on 6 Major Audit Firms and 7 Other Audit Firms that collectively
audited PLCs and schedule funds representing approximately 94% of the total market capitalisation of PLCs,
96.60% of the total NAV of schedule funds and over 65% of the total number of PIEs.

The AOB inspected 16 and 13 audit engagements respectively across these 6 Major Audit Firms and 7 Other
Audit Firms. Of the 13 audit engagements inspected under Other Audit Firms, 2 were in relation to special
inspections which mainly arose as a result of close co-operation with the SC’s Corporate Surveillance department.

diagram 1
Number of audit firms, individual auditors and engagements inspected by the AOB
in 2018

16 individual 11 individual
auditors auditors

6 major 7 Other
Audit Firms 16 audit Audit Firms 13 audit

engagements engagements

Source: AOB

AUDIT OVERSIGHT BOARD
ANNUAL INSPECTION REPORT 2018 21

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