Malaysia’s Audit Oversight Board Strengthens Audit Quality Oversight

Traders Union
All News
Regulators
Malaysia’s Audit Oversight Board

Highlights

The AOB’s 2025 inspection results showed that audit engagements requiring significant improvement fell to 27% from 46% in 2024.
The AOB inspects major audit firms every year and other firms at least once every five years based on risk, covering audit engagements and quality management systems.
Recurring weaknesses in accounting estimates, sampling, internal control testing and revenue recognition persist despite the improvement in results.

This article was translated from the original. Read the original version by our correspondent here.

Oversight framework and inspection findings

As described by The Edge Malaysia, what is often called “auditing the auditors” refers to independent oversight of how audits are conducted, the evidence supporting audit opinions and the systems designed to maintain audit quality. It does not mean that audits are repeated every year or that auditors are untrustworthy. Rather, it assesses whether sufficient and appropriate audit evidence was obtained to support the opinions issued.

The Audit Oversight Board, or AOB, inspects major audit firms every year, while other firms are inspected at least once every five years based on risk considerations. Under this program, selected engagements are reviewed to assess compliance with auditing standards, while firms’ quality management systems are also examined to ensure oversight covers both individual audit engagements and the environment in which audits are conducted.

Malaysia established the AOB on 1 April 2010 under the Securities Commission Malaysia Act 1993. Its mandate is to promote confidence in the quality and reliability of audited financial statements, particularly those of public-interest entities and scheduled funds, through registration, inspections, guidance and enforcement.

The AOB’s 2025 inspection results showed that the share of inspected engagements requiring significant improvement fell to 27% from 46% in 2024. However, recurring weaknesses were still identified in accounting estimates, sampling, internal control testing and revenue recognition, indicating the need for continued attention to audit practices and quality management.

In our earlier report on the impact of the 1MDB scandal, we discussed how failures in controls, audits and checks and balances continue to fuel debate about who should be held accountable when corporate governance fails. We also highlighted the role of boards, stronger whistleblower protections and the need for auditors to be more proactive in detecting risks early, rather than simply assessing past failures.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.