Page 26 - Inspection Report 2018

COmmON FINdINGS FOr mAJOr ANd OTHEr AudIT FIrmS

diagram 2
Top five common findings by audit quality Common findings observed from the AOB’s
theme inspections on audit engagements are illustrated
in Diagram 2. Sampling remained the top area
2018 2017 2016 of findings in 2018. The AOB is concerned that
findings continue to be observed in this basic
and fundamental area across both Major and
Revenue Other Audit Firms. For Major Audit Firms that had
Sampling Sampling
recognition established sampling methodologies, common
findings were related to inconsistent sampling
application among the engagement teams.
Accounting Accounting
estimates estimates Inventories Findings observed for Other Audit Firms mainly
arose from firms not having any specific sampling
methodology or firms that applied self-developed
Auditor’s Group audits sampling methodologies that did not meet
report Group audits the International Standards on Auditing (ISAs)
requirements.

Engagement Presentation
quality control and disclosure Sampling
review

Group audits / Related-party
Revenue
Revenue recognition transactions
recognition and balances

Source: AOB

Findings on auditor’s report and EQCR common findings were observed in 2018.

Further details of the findings observed in the area of EQCR are elaborated on page 25. As for findings
observed in relation to Auditor’s Report, these relate to the communication of KAMs in the Enhanced Auditors’
Reports (EARs). In 2015, the International Auditing and Assurance Standards Board (IAASB) issued its new and
revised standard on EARs. This standard was adopted in Malaysia and became effective for audits of financial
statements with financial periods ending on or after 15 December 2016, with the key change being the
communication of KAMs.

Communication of KAMs was determined as one of the thematic areas of focus in 2018. Further details are
presented in the Thematic Review section.

AUDIT OVERSIGHT BOARD
24 ANNUAL INSPECTION REPORT 2018

83806_Inside_NEW.indd 24 5/28/19 3:02 PM