A study of the Audit Oversight Board (AOB) Essay

Over the last few old ages, several fraud incidents were uncovered in errant local companies like Transmile, Energro, Welli Multi, Megan Media, GP Ocean and that behemoth. Statutory hearers play an of import function in guaranting that companies ‘ histories are trusty and dependable. Audit plays a critical function in a market economic system. So, Audit Oversight Board was established under Part IIIA of the Securities Commission Act 1993. Part IIIA was incorporated into the Securities Commission Act 1993 by virtuousness of the Securities Commission Amendment Act 2010 ( the Act ) .

It was enforced in Malaysia in 1April 2010 for the intent to heighten assurance and dependability of audited fiscal statements. The AOB ‘s mission is to help the Securities Commission associating to scrutinize inadvertence for promote, develop effectivity and robust audit inadvertence model in Malaysia, promote assurance in the quality and dependability of audited fiscal statements in Malaysia and in conclusion regulate hearers of public involvement entities.Part IIIA of the SCA provides that the AOB, in helping the SC in dispatching its audit inadvertence maps is responsible to implement policies and programmes in guaranting an effectual audit inadvertence system in Malaysia, registry hearers of PIEs, direct the MIA to set up or follow or by manner of both, the auditing and ethical criterions to be applied by registered hearers, behavior reviews and proctor programmes on registered hearers to measure the grade of conformity of scrutinizing and ethical criterions and behavior enquiries and enforce appropriate countenances against registered hearers who fail to follow with auditing and ethical criterions.The first stage of its mission is to advance good administration of the scrutinizing profession and hearers who are engaged by a public involvement entity on or after 1 April 2010 to scrutinize the public involvement entity ‘s fiscal statements. The AOB will collaborate with other relevant regulative bureaus such as the Companies Commission of Malaysia, Bank Negara Malaysia and the Malaysian Institute of Accountants to do certain that there is in topographic point a holistic regulative model for hearers in Malaysia to advance the growing of the Malayan scrutinizing profession with good administration.AOB portion information with these organic structures, allowing it a wider regulative and enforcement range. In other words, the AOB will ease regulative inadvertence and enforcement, in the aftermath of the recent planetary fiscal crisis that has reshaped believing and tried capital market regulators, puting new demands and duties on both institutional and independent ordinance.

The AOB besides playing a of import function in set uping common relationships with foreign state, which has been provided for under the Act, enabling it to come in into agreements and portion information with foreign audit regulators. Critically, where local audit houses are concerned, conformity with ISQC 1 will be critical if they want to take advantage of international chances.AOB is the first set up a enrollment procedure for all single hearers and audit houses to find scrutinizing ability and capacity. The AOB ‘s activities will embrace review, enquiry, enforcement and standards-setting, which will blend into a supervisory theoretical account. Non-registration will be an offense, and hearers who are found unfit run the hazard of suspension or may hold their licenses revoked. Any registered hearers who fail to follow with any commissariats in Part III A of the Act, notices or guidelines issues by the SC will be sanctioned.Constitution of the AOB is the manner to beef up the independent inadvertence of hearers.

AOB have an inadvertence system independent of hearers. AOB modernise entreaty procedure and have in topographic point a wide scope of countenances.There are assorted maps of AOB. For the enrollment, Registration procedure will embrace single hearers and audit houses of PIEs to guarantee every party involved in the auditing procedure is fit and proper. Non-registration is an offense and debut of crystalline enrollment eligibility standards in subdivision 31PSCA and AOB Handbook for Registration.

For hearers found non to be fit and proper, suspension, annulment or non-registration will be imposed and any individual aggrieved may register entreaty to SC. Finally, all the enrollment is done on an one-year footing.For the review, it takes the hazard based attack in respects to frequence of review. Inspection officers to hold power to entree working documents, books and histories and to take down unwritten or written information by the usher of international practise. After that, enquiry conducted when there is ground to believe that commissariats of the Act, written notice or guidelines are breached and AOB enquiry officers will carry on AOB enquiries. To enable effectual and proportionate, countenances had been taken like pecuniary mulcts, call offing or suspension of enrollment, necessitating extra professional instruction and required errant hearer to follow with the Act Censure.

Last, AOB has the right to direct MIA to set up, amend, modify or change its prescribed criterions if the demand should originate to guarantee dependability of the company ‘s audited fiscal statementThe Public Audit Oversight Board ( PCAOB ) is a private sector, non-profit corporation, created by the Sarbanes-Oxley Act of 2002, to supervise the hearers of companies in order to protect the involvements of investors and foster the public involvement in the readying of enlightening, just and independent audit studies.There were five members in PCAOB which are president, each of whom is appointed by theA U.S. Securities and Exchange CommissionA ( SEC ) and exactly two members of the PCAOB must be or hold been aA Certified Public Accountant.All accounting houses that wish to fix or publish audit studies on U.

S. public companies must register with the PCAOB. The PCAOBA Registration Page gives a list to registered accounting houses like signifiers, illustration, FAQs, other enrollment certification, and a nexus to online enrollment. TheA inspectionA subdivision included information about and studies on the Board ‘s go oning plan of reviews of registered public accounting houses.

Then, itsA enforcementA subdivision explains its attack to probes and includes lists ofA Disciplinary Proceedings.Under Section 101 of theA Sarbanes-Oxley Act, the PCAOB has the power to register public accounting houses that prepare audit studies for issuers. Second, it can put auditing, quality control, moralss, independency and other criterions associating to the readying of audit studies by issuers. After that, it can carry on reviews of registered public accounting houses. PCAOB investigate and continue disciplinary and impose appropriate countenances which were justified upon, registered public accounting houses and associated individuals of such houses.PCAOB besides perform other responsibilities or maps as the Board determines are necessary or appropriate to advance high professional criterions among and better the quality of audit services offered by registered public accounting houses and their employees. Besides that, PCAOB has the power to action, complain and support in its corporate name and through its ain advocate with the blessing of the SEC in any Federal, State or other tribunal. It besides conduct operations, maintain offices, and exercise all of its rights and powers in any portion of the United States, without respect to any making, licensing or other proviso of State orA municipalA jurisprudence.

Other than that, PCAOB can engage staff, comptrollers, lawyers and other agents as may be necessary or allow their mission. It besides enters into contracts, execute instruments, incur liabilities and do any and all other Acts of the Apostless and things necessary, appropriate or incidental to the behavior of its operations and the exercising of its powers.Some parts of the PCAOB ‘s power is to put regulations for the auditing industry includes the power to modulate the non-audit services that audit houses may offer their audit clients such as confer withing or revenue enhancement services. This power come out a consequence of allegations such as Enron, that hearers ‘ independency from their clients ‘ directors had been compromised because of the big fees that audit houses were gaining from these accessory services.Some more, as portion of the PCAOB ‘s fact-finding powers, the Board is empowered to necessitate that audit houses, or any individual associated with an audit house, supply testimony or paperss in its ownership. If the house or individual garbages to supply this testimony or these paperss, the PCAOB may suspend or suspend that individual or entity from the public audit industry. The PCAOB may besides seek the SEC ‘s aid in publishing subpoenas for testimony or paperss from persons or entities non registered with the PCAOB.Under Section 103 of the Sarbanes-Oxley Act of 2002, PCAOB was to set up auditing and related attestation, quality control, moralss, and independency criterions and regulations to be used by registered public accounting houses in the readying and issue of audit studies as required by the Act or the regulations of the Securities and Exchange Commission.

PCAOB sporadically publish Inspection Reports of registered public accounting houses. While a big portion of such studies are made public, parts of an review study that trade with unfavorable judgments or possible defects in the house ‘s quality control systems are non made populace merely if the house addresses those affairs to the Board ‘s satisfaction within 12 months after the study day of the month. However, if the Board determines that a house ‘s attempts to turn to the unfavorable judgments or possible defects were non satisfactory or the house makes no entry attesting any such attempts so the studies demand made public.AStudents outlook on Audit Oversight Board ( AOB ) functions and duties in Malayan ContextTheA Public Company Accounting Oversight BoardA ( PCAOB ) is a private-sector, non-profit corporation created by theA Sarbanes-Oxley Act ( SOX ) , a 2002A United States federal jurisprudence, which besides known as the ‘Public Company Accounting Reform and Investor Protection Act ‘ and ‘Corporate and Auditing Accountability and Responsibility Act ‘ under the legal power of Securities and Exchange Commission ( SEC ) to pull off theA auditorsA ofA public companies. The intent of PCAOB is to protect the involvements of investors and public involvement in the readying of just, enlightening and independent audit studies.In Malaysia, the Audit Oversight Board ( AOB ) is established under Part IIIA of the Securities Commission Act 1993.

AOB is intended to help Securities Commission ( SC ) in supervising the hearers of public involvement entities ( PIE ) and to protect the involvements of investors by advancing assurance in the quality and dependability of audited fiscal statements of public-listed companies and public-interest entities.The creative activity of both PCAOB and AOB were a consequence of the increasing figure of accounting restatement by public companies and a series of high-profile accounting dirts such as Enron and WorldCom. Their end is to better the quality ofA audited fiscal statements, cut down the hazard of scrutinizing failures, and increase public trust in fiscal coverage procedures and of the scrutinizing profession.The PCAOB has five members, including a president, each of whom is appointed by U.S.

Securities and Exchange CommissionA ( SEC ) . Precisely two members of the PCAOB must be or hold been aA Certified Public Accountant. However, if the president of the PCAOB is one of those two members, he or she may non hold been a practising certified public comptroller for at least five old ages prior to being appointed to the Board. Each member serves full-time, for staggered five-year footings. The wage of the PCAOB ‘s president is presently $ 556,000 per twelvemonth, while the wages of other board members are $ 452,000 yearly. The Board ‘s one-year budget of about $ 180 1000000s, which must be approved by the SEC each twelvemonth, is funded by fees paid by U.

S. securities issuers. The organisation has a staff of over 600, and its central office is inA Washington, D.C.However, AOB has seven members, including president, each of whom is appointed by the Malaysia Securities Commission ( SC ) .

PCAOB is responsible to register hearers and houses that audit U.S. public companies, set auditing and ethical criterions, behavior probes, disciplinary proceed in regard of hearers of public companies and implement conformity with SOX.

AOB is responsible to register audit houses and hearers of public-interest entities, follow scrutinizing and ethical criterions of MIA, behavior reviews and monitoring programmes, enquiries and impose countenances and cooperate with relevant governments and other inadvertence organic structures outside Malaysia. In trunkss, the maps of AOB are enrollment, review, enquiry, countenances and standard scene.RegistrationPer Section 102 of Sarbanes Oxley Act, accounting houses that intend to execute public audits on U.S. public companies have to register with PCAOB. Section 106 ( a ) of the Act provides that any non-U.S. public accounting house that prepares or furnishes an audit study with regard to any U.

S. public company is capable to the Board ‘s regulations to the same extent as a U.S. public accounting house. Any public accounting house using to the PCAOB for enrollment pursuant to Govern 2100 must finish and register an application for enrollment on Form 1 by following the instructions to that signifier. Unless directed otherwise by the Board, the applicant must register such application and exhibits thereto electronically with the Board through the Board ‘s web-based enrollment system. An applier may retreat its application for enrollment by written notice to the PCAOB at any clip before the blessing or disapproval of the application.In Malaysia, any individual who is an sanctioned company hearer under subdivision 8 of theA Companies Act 1965A and who is a signing spouse or who performs the map of an engagement quality control referee in regard of the readying of the audited fiscal statements of a PIE must be registered as an single hearer with the AOB.

However, hearer or audit house who are non scrutinizing the fiscal statement of PIE can register with the AOB merely if they are presently an hearer approved by subdivision 8 of the Companies Act 1965. Once an single hearer or audit house is registered with the AOB, both the person hearer and the audit house will be capable to the commissariats in Part IIIA of the SCA which include reviews, enquiries and countenances. Applicant may retreat their registered position by advising the AOB in composing the grounds for making so and return the presentment of enrollment to the AOB. However, the enrollment fee will non be refunded.

Registration procedureTo use for enrollment with the PCAOB, house will hold to travel to the PCAOB ‘s Web site at www.pcaobus.org, Web-based system, finish the enrollment application, and subject the application to the Board electronically. The first measure in registering is to supply basic information about itself, and make a user ID and watchword. Once completed, the house will have a “ verification codification, ” directing it to finish its Form 1. The Form 1 enrollment application may be completed as a web signifier.

Firms do non hold to finish and subject the signifier instantly after accessing the system. Firms may salvage it in the system and return to it at a ulterior clip to finish and subject it. After Form 1 is submitted, application will be processed by the enrollment system, an bill will be generated. Processing of application can take up to 24hours, after which applier can come back to the enrollment system to see and pay the bill via a provided nexus. Once paid, application will be deemed submitted.

The Board has up to 45 yearss after the day of the month your house submits your application to take action on your application. The existent figure of yearss until blessing will change depending on the information contained in the application and the figure of applications that are pending at the same clip as your application. However, if theBoard requests extra information refering the application, a new 45-day period will get down when the extra information is received. In add-on, if the Board can non find whether it is in the public involvement to O.

K. a house ‘s application, the Board may keep a hearing.For AOB, appliers may subject their application for enrollment in print and soft transcripts by manus or messenger service. An AOB enrollment is valid for a period of 12 months from the day of the month of enrollment. If submit application by manus, applier are required to convey along a extra transcript of a covering missive which the AOB will admit upon having the complete set of signifiers and relevant paperss from applier. If submit application by courier service, an acknowledgment missive will be faxed to applicant upon having the complete set of signifiers and relevant paperss from applier. Individual hearer is using through Form 1 while audit house is Form 2.Registration feesA Each applier for enrollment must pay a enrollment fee.

PCAOB will, from clip to clip, denote the current enrollment fee. The application fee is due at the clip of entry of the application. The enrollment fee will be computed separately for each house subjecting a Form 1 and will be based on the figure of issuer clients that an applicant audited during the predating calendar twelvemonth. Here are the charges of application fee:The one-year fee is due by July 31 of each twelvemonth and must be paid by each house that is registered as of March 31 of that twelvemonth.

Firms that registry after March 31 of the twelvemonth do non get down to pay the one-year fee until the undermentioned twelvemonth. The Board intends to convey bills for the one-year fee by early May of each twelvemonth, but the fee is due irrespective of whether the house receives the bill and regardless of whether the house has filed the needed one-year study on Form 2.No part of the enrollment fee is refundable, irrespective of whether the application for enrollment is approved, disapproved, or withdrawn.In Malaysia, the AOB will merely necessitate a enrollment fee on single hearers even though both audit houses and single hearers need to be registered.

In this respect, each person hearer seeking enrollment will necessitate to pay RM5,000A upon entry of the application. These fees should be paid yearly upon entry of application of reclamation of enrollment with the AOB.InspectionPCAOB inspects registered public accounting houses to measure conformity with the Sarbanes-Oxley Act, the regulations of the PCAOB, the regulations of the Securities and Exchange Commission, and professional criterions, in connexion with the house ‘s public presentation of audits, issue of audit studies, and related affairs affecting U.S. companies and other issuers. The Act requires the Board to carry on reviews yearly for houses that on a regular basis provide audit studies for more than 100 issuers, and at least one time in every three old ages for houses that on a regular basis provide audit studies for 100 or fewer issuers. PCAOB will fix a written study on each review to the SEC and to certain province regulative governments.

The Board besides makes parts of the studies available to the populace. However, certain information is restricted from public revelation, or its revelation is delayed, as required by the Act.Harmonizing to subdivision 31V of the SCA, AOB shall, from clip to clip, behavior reviews to measure conformity with the auditing and ethical criterions by an hearer, and the quality of audit studies prepared associating to the audited fiscal statements of PIE. The AOB may inspect hearers via a regular review plan which is conducted on a everyday footing or a particular review plan which could be driven by specific concerns that may be event-driven or based on industry concerns.Further, an AOB review may be carried out at either the house reappraisal degree or at the engagement reappraisal degree or both.

A steadfast reappraisal focal points on the reappraisal of an audit houses quality control systems and patterns and the grade of conformity with the demand of the International Standards of Quality Control 1 ( “ ISQC 1 ” ) . An engagement reappraisal on the other manus purposes to measure the grade of conformity with scrutinizing and ethical criterions of an audit battle conducted by an hearer.SanctionsSanctions imposed by the PCAOB may include suspension or annulment of a house ‘s enrollment, suspension or saloon of an person from tie ining with a registered public accounting house, and civil money punishments.

The Board may besides necessitate betterments in a house ‘s quality control, preparation, independent monitoring of the audit work of a house or single, or other remedial steps. PCAOB will supply the houses and individuals in breach an chance for a hearing before countenances imposed or impose countenances designed to discourage possible return and heighten the quality and dependability of future audits.Part IIIA of the SCA empowers the AOB to enforce a wide scope of administrative-type countenances on any individual who contravenes, fails to follow with or give consequence to the proviso of the Part IIIA of SCA, any status that imposed on a registered hearer or any written notice, guidelines issued by SC. The countenances include suspensions, pecuniary mulct, rebuke, animadversion and any other appropriate countenances.

SCA requires AOB to give the individual in breach a right to be heard before a countenance imposed. A individual who has been sanctioned or who is dissatisfied with the determination of the AOB can appeal to SC against the said determination within 30 yearss from the day of the month of the determination.Auditing and ethical criterionsIn PCAOB, appliers are required to detect all auditing and ethical criterions. There are two sorts of criterions in scrutinizing which are criterions and interim criterion. Standards are been adopted by PCAOB and approved by SEC which are AS No.1-7.

In 2003, PCAOB adopted certain preexistent criterions as its meantime criterions. Harmonizing to Rule 3200T, Interim Auditing Standards consist of by and large accepted auditing criterions, as described in the AICPA ‘s Auditing Standards Board ‘s Statement of Auditing Standards No. 95.

For ethical criterions, appliers need to see for the regulations and interim criterions. Harmonizing to Rule 3500T, Interim Ethics Standards consist of moralss criterions described in the AICPA ‘s Code of Professional Conduct Rule 102, and reading and opinions. In add-on, Interim Independence Standards consist of independency criterions described in the AICPA ‘s Code of Professional Conduct Rule 101 harmonizing to Rule 3600T.Applicants are required to detect all auditing and ethical criterions that may be adopted by the AOB from clip to clip which includes all auditing and ethical criterions adopted by the MIA and including by-laws and handbills published by the MIA relating to scrutinizing and ethical criterions. All of them must compliance with International Standard on Quality Control ( ISQC ) 1, which is the quality control for houses that perform audits and reappraisals of fiscal statements, and other confidence and related services battles.Student Expectation on Audit Oversight Board RolesAOB will register all hearers and houses to guarantee merely fit and proper individuals are in pattern. Therefore, pupils expect that AOB to supply more information about what is defined as individual tantrum in pattern as an hearer so that they would be able to manage it in the hereafter.On the other manus, it ‘s of import that the AOB like the US PCAOB will be well-funded to pull persons of high quality, high quality and faultless unity.

By giving good benefits, so it would assist to extinguish fraud that usually occur in scrutinizing procedure.AOB besides to be expected that reconstructing cardinal human values will be the manner frontward in heightening audit quality, which in bend will reconstruct assurance in the accounting profession, peculiarly hearers.Indirectly, by reconstruct the assurance in accounting profession will assist to heighten assurance and dependability of audited fiscal statements. Besides, AOB is expected to carry on enquiries and enforce appropriate countenances against hearers who fail to follow with auditing and ethical criterions. Therefore, who were making frauds will be punished and as illustration to future hearers so that others will cognize the bad effects after making fraud.AOB should portion cognition of audit environment and experience of independent audit regulative activities with pupils so that they will more understand the existent state of affairs of scrutinizing in the existent on the job environment. Furthermore, pupils will get down to fix themselves to accommodate the possible accounting and scrutinizing callings in assorted facets.Due to globalisation procedure, AOB should heighten the connectivity to other international organic structures which have involvement on audit quality and supply up to day of the month instruction to the pupil in planetary positions.

Furthermore, it helps us to increase the competence of our hereafter accounting professions in Malaysia.AOB should work closely together with all relevant parties such as BNM, CCM, Auditors and Industry groups to guarantee the successful execution of a robust and independent audit inadvertence model. So that, whichever industries the pupils are traveling to, the accomplishments and cognition of them will be utile and acquire consent from those industries.While executions of the AOB, pupils hope that the enrollment procedure of houses by the AOB will be crystalline and unfastened even to the smaller houses that have the equal demands. Therefore, the following coevals of accounting pupils will hold more occupation chances and for those who are making concern in accounting and auditing will hold more markets to research. In Malaysia, over 80 % of the entire accounting fees lands in the custodies of the 10 large houses.

The balance 20 % is shared among around 1,500 accounting houses. We hope that the Government will seek to guarantee that all houses of comptrollers be given equal chance.We besides hope that the AOB to be tasked with the right people, with qualified comptrollers with unity and who are free from any involvement in bing houses. Even though this is non traveling to be easy but this is an of import foundation for the hereafter development and to make consciousness among members of the mentality of the “ new ” scrutinizing profession by covering the enrollment & A ; enforcement mechanism under the proposed AOB.Nowadays, there is tonss of negative media coverage of the accounting profession so we are anticipating that AOB will efficaciously to work out the negative media coverage and to change by reversal the registration tendencies. By increasing our treatment on our professional codification of ethic with prospective pupils and their parents and demo them there is much more to the pattern of public accounting than merely scrutinizing we can get down to change by reversal the tendencies.Overall consequence that indicate that pupil exposed to media coverage which had negative impact on public perceptual experiences of the scrutinizing profession were inclined to believe that confer withing services should be independent of scrutinizing services and house should be less concerned with doing a net income and more concerned with supplying service to client and the puting populace. This consequence may supply some penetration into the diminishing popularity of accounting as a calling pick among immature people today.

AOB is expected to pull off such inequality.In add-on, we hope AOB to stress the demand of forensic facet of fraud probe, the confer withing demands and chances available with an accounting grade. Prospective pupils should besides be cognizant of the value of accounting grade in other countries of concern and to be educated in better place them under the new operating environment. Thus, an accounting grade is besides really utile and valuable in other calling waies.We besides expect to better inform possible accounting big leagues of the true provinces of the profession and what being an comptroller truly means. We know that this is the clip to alter and it is clip to reimagine and reconstruct these accounting and scrutinizing functions in order to authorise them to more constructively form corporate behavior.

It is besides clip to give more serious idea to the range of the public duties of corporate direction beyond simple conformity with the jurisprudence. We have besides included some ideas on institutional stockholders, and the demand for ongoing professional instruction.The inadvertence functions in recent old ages have been a figure of high-profile failures of public company boards. Some commission members see these failures as exclusions within a broader form of improved board public presentation over the past decennary, while others point to data on misdirecting fiscal coverage and inordinate executive compensation as grounds, among other things, that these failures arise out of a general civilization of board passiveness. These factors had affected the assurance of the inadvertence boards so standard of public presentation in AOB must be raised.Furthermore, the argument sparked by recent high-profile failures points to the demand to clear up the function of boards in public corporations.

The primary function of AOB is expected to put and supervise the company ‘s way, and to name, supervise, compensate and, where appropriate, replace direction. The board besides gives advice and makes several of import sorts of determinations, including O.K.

ing the company ‘s scheme. The board has ultimate legal duty for the company, and is the primary “ gatekeeper ” for guaranting that operating directors act with unity and competency.Finally, we besides recommend that hearers be brought into the mainstream of corporate administration and suggested possible betterments in the interaction between hearers and audit commissions by AOB.