22 February 2017
KUALA LUMPUR – Four Asean audit regulators and big-four audit firms (Deloitte Touché Tohmatsu, EY, KPMG and PricewaterhouseCoopers) in the region have collectively agreed on a measurable goal to improve audit quality.
This initiative was announced at the ASEAN Audit Regulators Group (AARG)’s 5th annual Audit Inspection Workshop held in Kuala Lumpur from 21 to 22 February 2017.
The Workshop also saw AARG embark for the first time, on a long term collaboration with World Bank to further strengthen audit oversight practices in the region.
Audits play a crucial role in upholding the reliability of financial statements and investors’ confidence in capital markets.
This new initiative saw the Big-Four audit firms in Malaysia, Indonesia, Singapore and Thailand agree to work towards achieving a reduction of at least 25% in the number of listed companies’ audits with inspection finding(s).
The AARG comprises Malaysia’s Audit Oversight Board (AOB), Indonesia’s Finance Professions Supervisory Center (PPPK), Singapore’s Accounting and Corporate Regulatory Authority (ACRA), and Thailand’s Securities and Exchange Commission.
The progress towards this goal will be monitored and measured at a national level by the respective AARG members on an ongoing basis.
This initiative also complements a similar initiative by the International Forum of Independent Audit Regulators (IFIAR) in March 2016 to achieve a targeted reduction in audit inspection findings globally, so as to address persistent deficiencies in listed public interest entity audits.
To achieve this goal, the AARG will ramp up its engagement with the big-four audit firms’ leadership to address root causes of recurring inspection findings.
In another first, the 5th AARG Audit Inspection Workshop marked the first collaboration between the World Bank and AARG.
To complement AARG’s on-going efforts to raise the standard of audit quality in ASEAN, the World Bank’s Centre for Financial Reporting Reform (CFRR), in collaboration with experts from the East Asia Pacific region of the Bank’s Global Governance Practice, has secured funding from various sources and is providing other technical assistance to boost capacity building efforts.
These efforts are in line with the AARG’s on-going work to achieve greater alignment in audit regulatory practices among ASEAN members.
The workshop was attended by over 75 participants from 12 jurisdictions including audit regulators from Brunei, Cambodia, Laos, Philippines, Vietnam, China, Japan, and Hong Kong.
To cater to the differing needs of the participants, the Workshop featured presentations by experts on various audit oversight models suitable for countries in the development phase of audit regulation, as well as thematic inspections suitable for countries with more established audit oversight programmes.
In commenting the goal of 25 percent reduction above, the executive chairman of AOB Malaysia, Dato’ Gumuri Hussain said that the initiative would instil a sustainable culture of audit quality across audit firms in the region which would result in enhancing the confidence in the capital market, in the quality and reliability of audited financial statements.
He did further comment on the collaboration with the World Bank that the inaugural collaboration was an imperative step to foster a consistently aligned and strong audit regulation in the ASEAN region.
“We are delighted with the opportunity to host such an important event in the AARG’s calendar of events,” he said.