Malaysian audit committees members and investors believe the introduction of Key Audit Matters (KAMs) through the enhanced auditors’ report has improved the auditors’ report, according to a survey by the Securities Commission Malaysia’s Audit Oversight Board (SC’s AOB), the Malaysian Institute of Accountants (MIA) and the ACCA.
An overwhelming majority of the 170 surveyed audit committees members (78%) and investors (73%) agreed that the enhanced auditors report is an improvement over the old format.
The survey found that the new model help audit committees in their discussions with the auditor and the company’s management, ensuring greater accountability on behalf of the stakeholders.
Additionally the survey found that the audit process was strengthened as the need for in-depth deliberation and discussion of KAMs fostered greater involvement of the audit partner in discussions with the audit committees. And consequently, discussions around KAMs generated more efforts on the part of management to improve disclosures in the annual report.
According to Regional Head of Policy, Asia Pacific, ACCA and board member on the International Auditing and Assurance Standards Board, Mr Chiew Chun Wee, the MIA will continue to help the audit profession and educate the stakeholders so they can achieve all of the benefits of EAR.
ACCA regional head of policy Chiew Chun Wee said: “EAR is a tool. The effectiveness of a tool depends on the conviction of those who wield it.”
“We have seen a promising start to the implementation of EAR in Malaysia, but much more can be done to fully extract the value of this enhanced form of communication and heighten the level of transparency and trust in the information flow within the capital market,” he continued. “Ultimately, we should see a greater realisation in the value of audit. It is important to recognise that the benefits are available not just to the largest entities but to the smaller listed companies and SMPs too, as long as all parties involved apply the right mind-sets and efforts to doing it right.”