Page 25 - Inspection Report 2018

Chart 2
Actions taken on engagements with significant improvements required

Routed to Enforcement Not routed to Enforcement but subject to
specific remedial measure

100
90
60% 33% 43% 27% 31% 22% 46%
80
70
60
Percentage 50

40
30 40% 67% 57% 73% 69% 78% 54%
20
10
0
2012 2013 2014 2015 2016 2017 2018

Source: AOB

Chart 2 shows a breakdown of inspected engagements with significant improvements required by actions
subsequently taken. The AOB observed that there was a reduction in the percentage of inspected engagements
being routed to Enforcement from 2015 to 2017 as compared to the preceding 3 years. However, the percentage
increased in 2018 where 46% of total inspected engagements with significant improvements required were
routed to Enforcement.

These inspection results further revealed that Other Audit Firms with 2 and fewer AOB-registered partners did
not have sufficient resources, infrastructure, systems and quality control processes to uphold audit quality. The
lack of internal capacity needed to comply with required professional standards was one of the reasons for the
AOB to introduce the New Criteria for Registration with the AOB. These new criteria require, among others, for
an audit firm registered with the AOB to have a minimum of 3 audit partners in the audit firm for the audits of
PIEs and schedule funds and to ensure that all its audit partners registered with the AOB are attached to only
1 audit firm at all times.

AUDIT OVERSIGHT BOARD
ANNUAL INSPECTION REPORT 2018 23

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