KUALA LUMPUR (July 24): The number of public interest entity (PIE) audit engagements requiring remediation saw an overall increase in 2023, according to the Securities Commission Malaysia's (SC) Audit Oversight Board (AOB).

In a statement on Wednesday, the capital market regulator said the AOB's Annual Inspection Report 2023 highlighted this increase in engagements requiring specific remediation measures, a matter that the AOB is closely monitoring.

These measures, the SC said, are imposed on audit firms and engagement partners to drive improvements in auditors’ professional scepticism and technical expertise in relevant auditing and accounting standards.

In light of these observations, the SC urged audit firms to intensify their efforts to achieve consistent performance across all PIE engagements.

According to the SC, the AOB’s inspection in 2023 included assessments of 50 partners and 50 audit engagements across 15 audit firms, including nine major audit firms.

The nine major audit firms audit 78% of public listed companies, representing 95% of their market capitalisation, and 1,188 schedule funds in Malaysia, with a net asset value of RM675 billion.

The SC noted a slight improvement in auditors’ performance in 2023, with a reduction in inspected engagements needing enforcement to 16% in 2023 from 18% in 2022.

Meanwhile, the SC said the AOB's Annual Inspection Report 2023 emphasised the importance of talent development and managing staff workloads to maintain consistently high-quality audits.

"With audit quality being a shared responsibility, the AOB continues to work together with key stakeholders to drive improvements in the financial reporting ecosystem," the SC said.