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Evaluating Audit Oversight Board’s Regulatory Impact: Analysis of Sanctions Imposed on Malaysian Audit Firms

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  • NOR AISHAH MOHD ALI
  • ZALEHA MAHAT
  • RAHAYU MOHD SEHAT
  • SITI HAWA SHUID
  • NORHANIZAH JOHARI

Abstract

This study analyzes the 12-year trend of cases involving auditor wrongdoing as disclosed on the Audit Oversight Board (AOB) Malaysia's website from 2012 to 2023. Utilizing content analysis, the research examines the nature, frequency, and severity of penalties or sanctions imposed on audit firms for various offenses. Findings indicate a dynamic pattern of regulatory actions, reflecting Malaysia's evolving landscape of audit quality and regulatory oversight. It was revealed that a total of 56 breaches of the Securities Commission Act 1993 involving 30 audit firms were reported and disclosed by the Audit Oversight Board over the period from 2012 to 2023. The findings revealed that most misconduct cases relate to the failure of audit firms to comply with the requirements of International Auditing Standards, International Standard on Quality Control and Malaysian Institute of Accountant By-Laws. There has been a notable decrease in cases involving auditors over the past six years. This could also indicate the dedication of the AOB to monitoring auditors' conduct to prevent their involvement in malpractice. This study contributes to the understanding of audit regulation effectiveness and the behavioral patterns of auditors in response to regulatory scrutiny.

Suggested Citation

  • Nor Aishah Mohd Ali & Zaleha Mahat & Rahayu Mohd Sehat & Siti Hawa Shuid & Norhanizah Johari, 2024. "Evaluating Audit Oversight Board’s Regulatory Impact: Analysis of Sanctions Imposed on Malaysian Audit Firms," Information Management and Business Review, AMH International, vol. 16(2), pages 125-136.
    • Handle: RePEc:rnd:arimbr:v:16:y:2024:i:2:p:125-136
    DOI: 10.22610/imbr.v16i2(I).3730
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    1. Jaakko Rönkkö & Mikko Lilja & Lasse Oulasvirta, 2023. "Voluntary adoption of the International Standards on Auditing (ISA) in local government audits—empirical evidence from Finland," Public Money & Management, Taylor & Francis Journals, vol. 43(3), pages 277-284, April.
    2. Lamoreaux, Phillip T., 2016. "Does PCAOB inspection access improve audit quality? An examination of foreign firms listed in the United States," Journal of Accounting and Economics, Elsevier, vol. 61(2), pages 313-337.
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