ASEAN Audit Regulators And Audit Firms Discuss Initiatives To Raise Audit Quality And Market Transparency In The Region

ASEAN audit regulators and audit firms in the ASEAN region have just concluded a meeting that discussed initiatives to raise audit quality and market transparency in the region. The ASEAN Audit Regulators Group’s (AARG) 5^th Annual Meeting was held in Kuala Lumpur from 15-16 June 2015.

2          Hosted by Malaysia’s Audit Oversight Board (AOB), Securities Commission Malaysia, the meeting was attended by over 80 regulators and audit firm representatives from 6 ASEAN countries and Hong Kong. Besides the AARG members comprising Malaysia’s AOB, Singapore’s Accounting and Corporate Regulatory Authority (ACRA), and Thailand’s Securities and Exchange Commission (SEC), the meeting also saw a wider participation by regulators from Cambodia, Hong Kong, Indonesia, Laos and Philippines. Joining the meeting to give the audit firms’ views were leadership of the regional Big 4 audit firms and representatives from the Regulatory Working Group (RWG) of the Global Public Policy Committee (GPPC) firms[1].

3          This year’s discussions focused on two key areas. First, the use of Audit Quality Indicators (AQIs) to spur deeper conversations on audit quality matters between audit firms and stakeholders such as audit committees. Second, challenges and opportunities arising from the implementation of the expanded auditor’s report.

4          Commenting on the discussion on the use of AQIs, Mr Kenneth Yap, Chief Executive, ACRA said “There was general agreement that the AQIs could be a useful tool for audit committees to start a meaningful conversion with audit firms on the quality of their audits. In Singapore’s context, ACRA has been exploring the potential of having an AQI framework and we are currently actively engaging audit firms and company directors on this.” 

5          The expanded auditor’s report will be implemented globally for audits of financial statements for periods ending on or after 15 December 2016. New requirements to disclose key audit matters are viewed as a potential game changer in enhancing the quality of auditing and financial reporting. Participants at the meeting agreed this was a good opportunity to increase transparency on the value and relevance of audit in today’s increasingly complex business environment where investors and other stakeholders are making more demands on financial reporting.

6          AOB Executive Chairman Mr Nik Mohd Hasyudeen Yusoff said “The expanded auditor’s report is envisaged to create more communicative value to the users of the report by providing a more informative and tailored reporting specific to clients’ circumstances. This is in contrast with the present reporting approach consisting of standard terms and boilerplates.”

7          Reflecting on the meeting’s discussions, Mr Thawatchai Kiatkwankul, Director of the SEC's Accounting Supervision Department noted that any initiatives to raise quality would require collaboration between audit firms and regulators. He said “Close collaborative efforts (between audit firms and regulators) on initiatives such as the AQI and the expanded auditor’s report are crucial if we want to raise the standards of audit quality in the region. This will bode well for investor confidence in ASEAN capital markets.”