Audit Oversight Board «Annual Report 201 Part 3 Statistics and Others 54
Part 3 Statistics and Others Registration and Recognition of Auditors in Malaysia Chart 1 Registered and recognised auditors as at 31 December 201 Registered audit firms Recognised foreign audit firms 10 and more partners 5-9 partners 2-4 partners 54% 9% 54 1% 20% 22% 5% 351 Individual Auditors 59% 14% Audits of and remain concentrated with registered audit firms having 10 and more partners. 6% 10% 1% 83% 1% 3% 96% 1,155 1,023 Schedule Funds PLCs Total Market Capitalisation Total NAV 95.8% Registered audit firms 10 and more partners 99.2% 0.% 5-9 partners 0.1% 3.4% 2-4 partners 0.% 0.1% Recognised foreign audit firms 0% 55
Audit Oversight Board «Annual Report 201 Chart 2 5-year registration and recognition statistics 1,400 1,200 1,000 800 600 1,166 1,144 1,140 1,142 1,148 1,021 1,023 981 20 18 16 14 12 10 16 10 12 19 1 400 302 304 313 325 334 8 6 5 5 5 5 200 0 53 52 50 51 49 2013 2014 2015 2016 201 4 2 0 6 6 2013 2014 2015 2016 201 Registered Audit Firms Registered Individual Auditors Recognised Audit Firms Recognised Individual Auditors * Auditors of are subject to the AOB s registration regime with effect from 15 September 2015. Registration Registered individual auditors continued to increase in number while there was a small reduction in total number of registered audit firms evidence of the industry s ongoing capacity building efforts. Recognition There is minimal movement in the number of recognised foreign audit firms as this is largely driven by the number of foreign incorporated companies listed on Bursa Malaysia. 56
Part 3 Statistics and Others Audit Clients Movement Major collectively audited approximately 93% of the PIES listed on Bursa Malaysia by market capitalisation and 99% of by total NAV. In 201, there was continued movement of PIE audit clients from Major to Other. Chart 3 3-year movement of PIE and schedule fund audit clients Audit clients movement from Major to Other Audit clients movement from Other to Major 25 5 1 2 2015 12 2016 201 3 6 2015 2016 201 * Auditors of are subject to the AOB s registration regime with effect from 15 September 2015. 5
Audit Oversight Board «Annual Report 201 Chart 4 Breakdown of PIE audit clients 201 64 by Major 384 by Other by Foreign 1,155 2016 6 by Major 366 by Other by Foreign 1,149 2015 86 by Major 354 by Other by Foreign 1,149* *Auditor appointment was in progress for 2 as at 31 Dec 2015. 58
Part 3 Statistics and Others Chart 5 Breakdown of schedule fund audit clients 201 985 audited by Major 38 audited by Other 1,023 2016 990 audited by Major 31 audited by Other 1,021 2015 952 audited by Major 29 audited by Other 981 59
Audit Oversight Board «Annual Report 201 Enforcement Actions No. Auditors 1. Adam Selamat Musa of Adam & Co, engagement partner in the audit of a public listed entity for the financial year ended 31 December 2013. 2. Sathiea Seelan Manickam of Morison Anuarul Azizan Chew, engagement partner in the audit of a public listed entity for the financial year ended 31 December 2011. 3. Tan Poh Ling, former partner of Morison Anuarul Azizan Chew, engagement partner in the audit of a public listed entity for the financial year ended 31 December 2012. Brief description of misconduct Breached the AOB s registration condition imposed under Section 31O(4) of the SCMA. Failed to comply with certain requirements of the International Standards on Auditing in the performance of an audit of the public listed entity. Breached the AOB s registration condition imposed under Section 31O(4) of the SCMA. Failed to comply with certain requirements of the International Standards on Auditing in the performance of an audit of the public listed entity. Breached the AOB s registration condition imposed under Section 31O(4) of the SCMA. Failed to comply with certain requirements of the International Standards on Auditing in the performance of an audit of the public listed entity. Action taken Monetary penalty of RM5,000 Reprimand Reprimand 60
Part 3 Statistics and Others Acronyms and Abbreviations AARG ASEAN Audit Regulators Group AASB Auditing and Assurance Standards Board ACCA Association of Chartered Certified Accountants AOB Audit Oversight Board BNM Bank Negara Malaysia EAR Enhanced Auditors Report ESB Ethics Standards Board IASB International Accounting Standards Board IAASB International Auditing and Assurance Standards Board IFIAR International Forum of Independent Audit Regulators IFRS International Financial Reporting Standards ISA International Standards on Auditing KAM Key Audit Matters MASB Malaysian Accounting Standards Board MFRS Malaysian Financial Reporting Standards MIA Malaysian Institute of Accountants MICPA The Malaysian Institute of Certified Public Accountants MMoU Multilateral Memorandum of Understanding NAV Net asset value PIE Public-interest entity PLC Public-listed company SC Securities Commission Malaysia SCMA Securities Commission Malaysia Act 1993 SSM Companies Commission of Malaysia 61
Audit Oversight Board «Annual Report 201 Definitions Auditor Big-Four Major Other Public-interest entity An individual auditor or audit firm who is registered or recognised under section 31O of the SCMA as a registered auditor or recognised auditor of a PIE or schedule fund. Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. Audit firms with more than 10 partners and audit more than 50 PIE clients with a total market capitalisation of above RM25 billion. Audit firms other than Major. Entity specified in Part 1 of Schedule 1 of the SCMA: (a) a PLC or a corporation listed on the stock exchange; (b) a bank licensed under the Financial Services Act 2013; (c) an insurer licensed under the Financial Services Act 2013; (d) a takaful operator licensed under the Islamic Financial Services Act 2013; (e) an Islamic bank licensed under the Islamic Financial Services Act 2013; (f) a person prescribed as a prescribed financial institution under section 212 of the Financial Services Act 2013 or a person prescribed as a prescribed Islamic financial institution under section 223 of the Islamic Financial Services Act 2013; (g) a developmental financial institution prescribed under the Development Financial Institutions Act 2002; (h) a holder of the Capital Markets Services Licence for the carrying on of the regulated activities of dealing in securities, dealing in derivatives or fund management; (i) an exchange holding company approved under the securities laws; (j) an exchange approved under the securities laws; (k) a central depository approved under the securities laws; (l) a clearing house approved under the securities laws; (m) a self-regulatory organisation recognised under the securities laws; (n) a private retirement scheme administrator approved under the securities laws; (o) a trade repository approved under the securities laws; (p) the Capital Market Compensation Fund Corporation; and (q) any other person as the Minister may prescribe by order published in the Gazette. Schedule fund Fund specified in Part 2 of Schedule 1 of the SCMA: (a) (b) (c) a private retirement scheme approved by the SC under the Capital Markets and Services Act 200 (CMSA); a unit trust scheme approved, authorised or recognised by the SC under the CMSA; and any other capital market funds as may be specified by the SC. Top 10 Top 10 audit firms based on their PLC audit clients market capitalisation in Malaysia. 62