Audit Oversight Board (AOB)

Fact

• In Malaysia, the Audit Oversight Board (AOB) was established under Part IIIA of the Securities Commission Malaysia Act 1993.
• Its main purpose is to regulate auditors of public-interest entities (PIEs) and certain funds, and to promote confidence in the quality and reliability of audited financial statements. sc.com.my+2maicsa.org.my+2

Elaboration

• Public-interest entities (PIEs) = listed companies, financial institutions and other entities that are important to the public and capital market.
• Before AOB, the profession was more self-regulated by professional bodies; now, AOB provides independent public oversight. Semantic Scholar

• The AOB can:

  • Register auditors of PIEs;
  • Inspect audit firms’ working papers;
  • Conduct inquiries;
  • Impose sanctions (e.g. reprimand, fines, conditions). sc.com.my+1

Example

• A listed company’s auditor performs weak audit work and misses serious misstatements.
• AOB inspects the firm, finds poor documentation and lack of scepticism.

• AOB may:

  • Issue a public reprimand,
  • Impose training requirements, or
  • Restrict the auditor from auditing PIEs.

• This encourages better audit quality, which protects investors.