Auditing 2

PA 503 : FUNDAMENTAL OF
AUDITING PN JULIANA BT MOHD ARIFFIN
NUR AZWEEN SYAFIRA BT ABDUL NASIR
10DAT11F2025
NOR AMALIA BT AHAD
10DAT11F2027
NORMASTURA BT AHMAD
10DAT11F2039
SITI NABILAH BT ABDULLAH
10DAT11F2042
NUR SYUHADA BT RUSLAN
10DAT11F2048
LECTURER’S NAME :
STUDENT’S NAME :

2.0 : PROFESIONAL AUDITING PRACTI
2.1.1 : OVERALL AUDIT
PROCESS

2.1.2 ROLE OF AUDITING AND
ACCOUNTING
STANDARDS IN AUDITING PROCESS
AUDITING STANDARDS
 The Accounting and Auditing Committee (AAC) of MIA is
responsible for issuing pronouncements on auditing matters.
 MIA are called Malaysian Approved Standards on Auditing
(MASA).
 Main functions are the issuance of guidelines on the
interpretation of auditing standards and reviewing making
recommendations and submissions on corporate law
methods
affecting financial reporting and related matters.

ACCOUNTING STANDARDS
 The responsibility of the Malaysian Accounting
Standards Board (MASB) established under
Financial
Reporting Act 1997.
 Institute participates actively in the MASB’s
standards
setting process.
 MIA also educates its members on the application
of
the MASB standards.

2.1.3 GENERAL TERMS USED IN AUDITING
PROCESS
TRUE AND FAIR VIEW
 The financial statements are not misleading.
 The financial statements do not contain any
material
misstatements.
 The financial statements are prepared on the basis
of established criteria.

2.2 : LEARN THE PROFESSION AS AN AUDITOR
QUALIFICATIO
NS
(PART 1)
ACCOUNTA
NT ACT 1967
(PART 2)
ACCOUNTA
NT ACT 1967
 DIPLOMA IN
ACCOUNTING
 ADVANCED
DIPLOMA IN
ACCOUNTING
 BACHELOR OF
ACCOUNTING
WAS A MEMBER OF ASSOCIATION OF
ACCOUNTANT :
MALAYSIAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANT (MICPA)
MALAYSIAN INSTITUTE OF ACCOUNTANS (MIA)
OR PRACTISING CERTIFICATE FROM MIA
WORK EXPERIENCE IN AUDIT FIRM :
3 YEARS AFTER APPLYING BECOME A
MEMBER
 MUST ATTENDING PUBLIC PRACTICE
PROGRAMME BY MIA

2.2.2 : APPOINTMENT, REMOVAL & RESIGNATION OF AUDIT
APPOINTME
NT
SECTION 172(2) CA 1965 :
1. EVERY PUBLIC COMPANY SHOULD APPOINT
INDEPENDENT AUDITORS
2. APPOINTMENT WILL BE MADE AT THE ANNUAL
GENERAL MEETING OF THE FOLLOWING
3. DIRECTOR OF VACANCIES TO FILL ANY TEMPORA
POSITION FOR AUDITORS
4. FOR THE NEW COMPANY, DIRECTOR CAN APPOIN
THE AUDITOR IN FIRST AGM

REMOVAL &
RESIGNATIO
N
SECTION 172(3) CA 1965 : AUDITOR POSITION
CAN BE TERMINATED IN CASE OF DEATH,
RESIGNATION OR DISMISSAL
SECTION 172(14) : AUDITORS CAN PLACING HIS
IF NOT A SINGLE COMPANY AUDITOR
SECTION 172(15) : AUDITOR POSITION CAN BE
PLACING WITH PROVIDE WRITTEN NOTICE IN
CERTAIN SITUATION
SECTION 172(7) : WHEN AN AUDITOR BEING
REMOVED, THEN THE COMPANY MAY APPOINT
OTHER AUDITORS IMMEDIATELY
IF A COMPANY IS NOT APPOINT OTHER AUDITOR
THEN THE REGISTRAR OF COMPANIES WILL AP
AN AUDITOR AND HOLD THAT POSITION UNTIL T
END OF NEXT AGM

2.2.3 : DUTY, RIGHT AND RESPOSIBILITY OF AUDITOR
DUTY
BEWAR
E OF
DUTIES
DUTIES
TO
THIRD
PARTIE
S
DUTIES
TO
DETECT
FRAUD

RIGH
T
AUDITORS
AUTHORIZED TO
CHECK THE RECORD
COMPANY
AUDITORS ARE FREE
FROM ANY ORAL OR
WRITTEN
STATEMENT
AUDITORS ARE NOT
ALLOWED TO LOMIT
THE SCOPE

RESPONSIBILI
TY
VERIFY THE
ACCURACY
OF
COMPANY
ACCOUNTS
REPORT TO THE
MEMBERS OF
THE COMPANY
ACCOUNTS
SUBMITTED
DURING AGM
GIVE
OPINIONS
TO OBTAIN
INFORMATIO
N
PRESENT
THE
AUDITORS
REPORT TO
THE
DIRECTOR
DISCLOSURE
OF FINANCIAL
FRAUD
COMPANY IN
ACCOUNT IF
THE ANNUAL
SHAREHOLDE
RS TO ERRORS

2.3 : UNDERSTAND THE AUDIT PROFESSION AND REGUL
IN MALAYSIA
2.3.1 : PROFESSIONAL BODIES INVOLVED IN AUDIT PROFESSION
Profession
bodies
Ministry Of
Finance
Member of
MIA
Professionally
Quality
Auditors must
understanding
the principle &
rules.
Member of
MICPA

MINISTRY OF FINANCE
All audit company established have got confirmation from Ministry
Of Finance to audit all of incorporation under section 8 Company
Act 1965.
MEMBER OF M.I.A
All audit firm should have registration as a Member Of MIA body
of a profession to the field of accounts and auditing.

PROFESSIONALLY QUALITY
Audit company that is recognized as a qualified professional
body.
AUDITORS MUST UNDERSTANDING
THE PRINCIPLE & RULES
Audit company must know and understand the concepts and
principles of accounting and auditing.

•to advance the theory and practice of accountancy in all its
aspects;
•to recruit, educate, train and assess by means of
examination
or otherwise a body of members skilled in these areas;
•to preserve at all times the professional independence of
accountants in whatever capacities they may be;
•to maintain high standards of practice and professional
conduct by all its members and
•to do all such things as may advance the profession of
accountancy in relation to public practice, industry,
commerce,
education and the public service.
MICPA

2.3.2 GENERAL AUDIT PROFESSION IN MALAYSIA
1. DELOITTE
- The Big Four auditing firms is Deloitte Touche Tomatsu Limited, commonly
known as Deloitte
- The second largest professional services network in the work
- Deloitte provides audit, tax, consulting, enterprise risk and financial
advisory services
2, ERNST & YOUNG
- The fourth accounting firm to make the Big Four is Ernst & Young was
founded
in the 19th century.
- Provides assurance, advisory, tax and transaction advisory services

3. PRICE WATER HOUSE COOPERS ( PwC )
- Is the world’s largest audit and accountancy firm and one of the
Big
Four auditors
- Provide assurance, tax and advisory services
4. KPMG SDN BHD
AWARDS :
- Global 100 - Private Equity Advisory Firm of the Year - Malaysia
- ICT Organisation of the Year - PIKOM ICT Leadership Awards
(PILA) 2013
- DealMakers' Global Award - Private Equity Advisory Firm of the
Year - Malaysia
- Finance Monthly Global Awards 2013 - Financial Advisory Firm of
the Year - Malaysia
- GRADUAN Brand Awards 2012 – Preferred Employer in
Business and Preferred Employer in Accounting
- M&A International Global Awards Private Equity Advisory Firm of
the Year – Malaysia

2.3.3 REGALUTORY AND STANDARDS USED
IN AUDIT
PROFESSION IN MALAYSIA
REGULATORY STANDARDS

CENTRAL BANK (BNM)
 Established on 26 January 1959 under the central bank og malaysia
Ordinance , 1958
 Main objective :
- Issue currency & maintain reserve in order to safeguard the value of
currency
- Act as a banker & financial adviser to the government
- Promote monetary stability & a sound financial structure
- Influence the credit situation to the advantage of the country
 Function :
- Carried out within the context of the broader goals of promoting economic
growth, a high level of employment, maintaining price stability & reasonable
balance in the country’s international payment position, endocarting
proverty & restructuring society
 responsibility to answering that the availability & cost of money & credit in the
economy are consonant with national macroeconomic objectives

SECURITIES COMMISION
Act 1993 – set up the securities commision
 Function:
- to promote a strong and healthy securities market and to maintain the
confidence of investors in line with provisions of the Securities Commission
Act and the Securities Act 1983
 Function include :
- Supervising exchanges, clearing house and central depositories
- Registering authority for prospectuses of corporations other than unlisted
recreational clubs
- Approving authority for for corporate bond issues
- Regulating all matters relating to securities and futures contracts, unit trust
schemes, mergers and acquisition of companies
- Lincesing and supervising all lincesed persons
- Encouraging self- regulation
- Ensuring proper conduct of market institiutions and licensed persons
 The securities commision played a significant role in the establishement of the
Financial Reporting Act1997 and continues to be involved in the Malaysia
Accounting Standards Board ( MASB )

COMPANIES COMMISSION OF MALAYSIA
SEC 169 (4) CA 1965 : Every company incorporated under the act to have
its profit & loss account and balance sheet duly audited before they are
presented at the AGM
SEC 9 ; That audit must be performed by an approved company auditor
as define under section 8
SEC 174 (2) : The power & duties of the auditor under cmpany’s account
 Set up to amalgomate the activities of the former register of Company &
Register of Business

 Main function
To ensure that the provisions of the act & law specified below are
administered, enforred, carried out & complied with :
- Companies Act 1965
- Trust Companies Act 1949
- Kootu Funds ( Probihition ) Act 1971
- Registration of Business Act 1956
- Any Subsidiary legislation made under the act specified above
 Function include among other :
- Enhancement & promotion of the supply of business & corporate information
- Acting as agent of the government & providing services in collecting &
enforcing payment of prescribed fees
- Regulations & promoting proper conduct amongst directors, secretaries
& other officers of a corporation
 Companies Commisionof Malaysia played active role in accounting profession

AUDITING
STANDARDS
- Standards are needed to enhance the quality of audit performed by
the auditor.
- Standards are “ Measure of an acceptable level of quality of
professional
work performed by auditors.
- Guidelines for an auditor is performing an audit of financial statements.
- Auditor in Malaysia should follow the standards the professional
qualities
issued in the By-Laws ( on Professional Ethics, Conduct and Practice )

Auditing 2

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