Article Search by: Mohd Syairol Azwan Shabudin, Accountant | Audit
Source: https://www.at-mia.my/

This article summarises the key findings and recommendations from the Malaysian Institute of Accountants (MIA) regarding the implementation of the International Standard on Quality Management (ISQM) in audit firms across Malaysia. It highlights main challenges faced by firms and outlines practical steps to strengthen audit quality management systems, thereby enhancing the reliability and credibility of financial reporting.

Introduction

ISQM represents a major shift from a passive, compliance-driven model to a proactive, risk-based approach in ensuring audit quality. MIA’s review via the Quality Assessment Programme (QAP) and Practice Review identified significant gaps, particularly in leadership, documentation, and internal monitoring practices.

Key Findings

1. Inadequate Risk Assessment:
   Many firms continue to rely on generic templates that are not tailored to the firm’s specific needs, making risk management less effective.
2. Leadership and Accountability:
   Responsibility for ISQM is often unclear or not assigned to the appropriate individual, resulting in weak accountability.
3. Ethical Compliance:
   There are gaps in independence confirmations by audit team members, which may affect the integrity of the audit process.
4. Client Acceptance and Documentation:
   Critical procedures like client acceptance, engagement letters, and Know-Your-Client (KYC) processes are not always implemented thoroughly and on time.
5. Training and Resources:
   Training policies are often limited to MIA members, with little record-keeping for all staff.
6. Monitoring and Remediation:
   Many firms lack regular internal monitoring and have no structured root cause analysis for audit findings.

Recommendations for Improvement

• Implement clearer and more structured ISQM policies and procedures.
• Assign ISQM responsibility to qualified and credible individuals.
• Conduct regular ISQM-related training for all staff.
• Encourage participation in QAP for independent external review and continuous improvement.
• Leverage technology to enhance documentation and monitoring processes.

Conclusion

Comprehensive compliance with ISQM will boost the reputation and client trust in audit firms and reduce regulatory risks. This MIA article serves as an essential reference for institutions committed to upholding audit quality and integrity.

Date of Input: 17/06/2025 | Updated: 17/06/2025 | nurmiera