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CURRENT ISSUES
A bungalow measuring
1,650 sq was being offered
for RM60,000. After the
payment was made, the
actual construction did not
take place
KEY AUDIT MATTERS (KAM)
Definition:
• Those matters that, in the auditor’s professional judgement,
were of most significance in the audit of the financial
statements of the current period.
2. INSPECTIONS
1. REGISTRATIONS
• Conduct inspections and
• AOB is responsible for the monitoring programs on auditors
registration of auditors of to assess the degree of
public interest entities compliance with auditing and
• It is an offense if the auditor ethical standards.
and audit firm if the fail to • The inspection may be done at a
firm level or an engagement level
register
or both.
• The registration of auditors of • The AOB adopts a risk based
public interest entities or approach and conducts regular
schedule funds would ensure inspections annually on audit firms
that only fit and proper which have more than 10 partners
auditors are involved in and audit more than 40 PIEs
auditing the financial • Regular inspections on mid-tier
statements of public interest audit firms and sole proprietors are
completed within a pre-
entities or schedule funds
determined inspection cycle.
4. SANCTIONS
• Sanction is a threatened
penalty for disobeying a law or
a rule
3. INQUIRY
• In determining the type of
sanction that is imposed on any
• Conducted when there is
contravention or breach, AOB
a reason to believe that
takes into account the nature
there is a misconduct,
and seriousness of the offences.
breach of the provision of
act, written notice and
Examples of sanctions: Reprimand,
guidelines.
requiring professional education
• The inquiries will be
to be undertaken, assigning a
conducted by the Inquiry
reviewer to oversee an audit that
Officers
is undertaken by the auditor
concerned and financial penalty
of not exceeding RM500,000;
5. STANDARD SETTINGS
The audit of the project financial statements for the construction of an electrical
generation facility in Nigeria using funds loaned by the World Bank
As it can be clearly demonstrated that the financial statements are being used
outside of the country where the facility is based for purposes of significant
lending, investment or regulatory decisions, the audit would be considered a
transnational audit.