KUALA LUMPUR (April 22): A total of three firms and eight individual auditors faced sanctions from the Securities Commission’s (SC) Audit Oversight Board (AOB) for non-compliance in 2025.
Enforcement actions for non-compliance with International Standards on Auditing (ISA) and International Standard on Quality Management (ISQM 1) included monetary penalties, suspension of registration, and prohibitions, according to the AOB Annual Report 2025.
The board suspended the registration of one audit firm and two individual auditors while three faced prohibitions. Monetary penalties were also imposed on two audit firms and two individual auditors, while another person faced a fine together with prohibition.
Fines on audit firms amounted RM325,000 and RM98,750 were collected from individual auditors. All in all, monetary penalties totalled RM423,750.
The prohibition action covers accepting public interest entities (PIEs) or schedule funds as clients; auditing the financial statements of PIEs or schedule funds, and preparing reports related to the financial information of PIEs or schedule funds.
Notably, the AOB suspended Chengco Plt’s registration in June last year for two years due to “serious audit quality issues”. The move led it to resign from audit work for 35 public-listed companies.
AOB in its annual report said it found serious weaknesses in audit firms during its enforcement activities. This included poor internal controls and repeated issues from past reviews.
It said auditors often failed to properly check key areas such as financial adjustments, assets, and group accounts, and did not always assess whether assumptions used were reasonable.
In some cases, there was also insufficient documentation and audit evidence, especially on going-concern assessments, valuations, and fixed deposits.
In addition, records on work done by subsidiary auditors were often incomplete, making it unclear whether group audit opinions were properly supported.
“The AOB’s enforcement actions are intended to send a strong signal to the profession that serious breaches of standards, ethics, or regulatory requirements will be taken seriously,” the AOB said.
“It serves as a strong deterrent but also provides audit firms and individual auditors the opportunity to reassess their practices and strengthen their capacity to undertake future audits of public interest entities (PIEs) and schedule funds,” it added.