ISLAMABAD:Since its establishment in August 2016, the Audit Oversight Board (AOB), a young regulatory body, has registered as many as 101 audit firms with an objective to enhance the quality of audit of financial statements of public interest entities.
The AOB was established under the Part-IXC OF The SECP Act, 1997, to enhance audit quality and reliability of financial statements that were a key source of information to investors and other stakeholders.
The AOB deals with firms carrying audit of public interest companies and does not hold data of all audit firms, said AOB Usman Hayat while talking to reporter here.
“AOB maintains a database of those audit firms only that carry out or intend to carry out audits of public interest companies,” he said adding that the complete database of registered audit firms that carry out audits of both Public Interest Companies as well as Non-Public Interest Companies was maintained by Institute of Chartered Accountants of Pakistan (ICAP).
Hayat said that the AOB had been following a comprehensive mechanism for evaluating any audit firm registered with it.
He elaborated that bases on different perimeters, the AOB-registered audit firms were being evaluated on the basis of the inspection of the records for quality control for its compliance with International Standard on Quality Control-1 ( ISQC 1).
The evaluation procedure also include inspection of documentation of sample of PIC audit engagements selected by AOB on risk-based criteria, adding that engagements were evaluated for compliance with International Standards on Auditing as applicable in Pakistan, he added.
He said that since the inception of its operations, the board had deregistered 18 audit firms either on recommendation of Quality Assurance Board of ICAP or Non-renewal of registration by the audit firm.
These firms were also deregistered on their voluntary request for removal and/or non-submission of registration documents or on the basis of inspections resulting in compelling evidence to deregister the audit firm as per law.
Talking about the mandate of the board, he said that AOB was authorized to perform all such actions as deemed necessary to carry out its duties as defined in the schedule attached to Part IX(C) of SECP Act, 1997.
Till date, AOB has evaluated a total of 15 audit firms for reviewing either their internal system of quality control or review of audit engagements or both.
To a question about future targets, he said the AOB would continue to conduct regular inquiries and direct inspections by exercising its suo-moto powers under the Act and the Operations Regulations.
AOB is expanding its workforce and operations and had hired four new inspectors recently who will join AOB in current month (September 2019). AOB would also continue to enhance its capacity to increase its scale of operations.
He said that three more direct inspections have already been approved by the Board to be carried out in the coming weeks, adding that further improvements in the Quality Control Review Framework of ICAP would also be sought.