Page 18 - AOB 2018 (ENG)

Audit
Oversight
Board
ANNUAL
REPORT
2018

FOCUSED AND IMPACTFUL ENFORCEMENT OUTCOMES

For the very first time in 2018, the AOB imposed prohibitions against auditors for failing to carry out their role
as EQCR partners effectively and withdrew the recognition of a recognised foreign audit firm and individual
auditor.

The EQCR partner plays an important role in the quality control process of an audit and is key to safeguarding
audit quality. The action on the EQCR partners reinforces the gatekeeping responsibility in an audit
engagement.

The enforcement actions imposed commensurated with the nature and severity of the matter. The AOB
imposed stricter actions in cases of multiple instances of failures to perform audit procedures, failure in key
audit areas, failure to co-operate and provide accurate and timely information to the SC, failure to remain fit
and proper, and failure to comply with ethical standards.

In determining the appropriate enforcement action, the AOB considers the desired outcome it seeks to achieve.
To mitigate any risk of future failures in the capital market, the AOB imposed prohibition on its registered
auditors and audit firms from auditing any PIEs or schedule funds and/or accepting as clients any PIEs and
schedule funds. This includes situations where the AOB has observed the lack of capacity and capabilities
with the audit firm and/or auditor which may have an impact on the quality of audits of PIEs and schedule
funds. The duration of the prohibition is determined by the AOB after considering the facts of the case.

Monetary penalties were imposed as a deterrent to send a strong signal to the auditors and stakeholders that
non-compliance with auditing standards, laws and regulations are viewed seriously by the AOB.

Diagram 4
Enforcement actions for 2018

1 2 6* 5 #

Revocation of Withdrawals of Prohibitions Reprimands
Registration Recognition

Number of Enforcement 14

Actions in 2018

Note: *Out of 6 Prohibitions, 4 included monetary penalty totalling to RM475,000.
# Out of 5 Reprimands, 1 included a monetary penalty of RM225,000.

16 | PART ONE FOSTERING HIGH QUALITY INDEPENDENT AUDITING IN THE CAPITAL MARKET

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