The Audit Oversight Board ("AOB") is established under Part IIIA of the Securities Commission Act 1993 ("SCA") which came into force on 1 April 2010 to promote and develop an effective audit oversight framework and to promote confidence in the quality and reliability of audited financial statements in Malaysia.
The key responsibilities of the AOB, amongst others, are:
- implement policies and programmes in ensuring an effective audit oversight system in Malaysia;
- register or recognise auditors of public interest entities ("PIEs");
- direct the Malaysian Institute of Accountants ("MIA") to establish or adopt, or by way of both, the auditing and ethical standards to be applied by registered auditors;
- conduct inspections and monitor programmes on registered auditors to assess the degree of compliance of auditing and ethical standards;
- conduct inquiries and impose appropriate sanctions against registered auditors who fail to comply with auditing and ethical standards;
- cooperate with relevant authorities in formulating and implementing strategies for enhancing standards of financial disclosures of PIEs;
- liaise and cooperate with oversight bodies outside Malaysia to enhance the standing of the auditing profession in Malaysia and internationally; and
- perform such other duties or functions as the Audit Oversight Board determines necessary or appropriate to promote high professional standards of auditors and to improve the quality of audit services provided by auditors.
In accordance with Section 31V(1) of Part IIIA of the SCA, the registered audit firm and auditor will be subject to inspections by the AOB to assess the degree of compliance with the auditing and ethical standards by the auditor and the quality of the audit reports prepared by the auditor relating to the audited financial statements of the PIEs.
Section 31W of the SCA on the other hand empowers AOB to conduct an inquiry if there is a reason to believe that any auditor has contravened any provisions of Part IIIA of the SCA, any condition imposed under section 31O(4) of the SCA or any written notice or guidelines issued by the SC.