Page 19 - AOB 2018 (ENG)

Audit
Oversight
Board
ANNUAL
REPORT
2018

Diagram 5
The AOB’s enforcement observations

Firm Review Findings Engagement Review Findings

• Significant compliance gaps in the International • Failure to design and perform audit procedures
Standards on Quality Control (ISQC) 1 in key audit areas, which included planning
elements that compromised the engagement and risk assessments, consolidation and multi-
performance quality location audits

• Lack of commitment by the audit firm’s • Lack of professional scepticism during the
leadership to ensure audit quality course of the audit engagement

• Breaches of ethical standards

• EQCR Partner was not effective in the review of
the audit engagement

The AOB requires its registrants to remain fit and review of three PLCs. The audit firm, EP and EQCR
proper at all times. In 2018, the AOB revoked the partner were prohibited from auditing the financial
registration of an auditor for failing to remain fit statements of a PIE or schedule fund for nine
and proper. The United States’ (US) Public Company months. In addition, the EP and the audit firm were
Accounting Oversight Board (PCAOB) shared fined RM81,000 and RM227,000 respectively.
information with the AOB on its enforcement
action against the auditor, which among others, Similarly, enforcement actions were taken by the
included breaches of independence requirement. AOB against another audit firm, EP and EQCR
Independence is fundamental to an audit partner for failures noted in its inspection in respect
engagement and the AOB has been very clear with of a PLC. The audit firm, EP and EQCR partner were
its expectations that breaches relating to ethical prohibited from accepting as audit clients any PIEs
standards will not be tolerated. or schedule funds, and prohibited to audit any PIEs
or schedule funds for 12 months. The audit firm and
The recognition of a Singapore-based audit firm EP were also imposed with a monetary penalty of
and its partner was withdrawn by the AOB for their RM123,000 and RM44,000 respectively.
failure to co-operate with the SC. The audit firm and
the partner failed to co-operate with a request for The AOB imposed five reprimands for failure
audit evidence in respect of an audit client, a PLC to comply with certain requirements of the
and its subsidiaries, within a prescribed time. International Standards on Auditing (ISAs). One
of the reprimands included a monetary penalty of
The AOB took to task the audit firm, EP and EQCR RM225,000.
partner for findings noted in its engagement

PART ONE FOSTERING HIGH QUALITY INDEPENDENT AUDITING IN THE CAPITAL MARKET | 17