Audit & Assurance Services

An audit engagement is not a review of every transaction, nor a guarantee that every error or fraud will be identified. It is a structured engagement designed to obtain reasonable assurance about whether financial statements are free from material misstatement, based on the applicable reporting framework and the circumstances of the entity.

When audit or assurance support may be relevant

A business may need to consider an audit or other assurance engagement because of a statutory requirement, its governing documents, financing arrangements, stakeholder expectations or a specific reporting purpose. The requirement, the intended users of the report and the reporting period should be identified before the scope is discussed.

Audit, review, other assurance and non-assurance work are different types of engagement. They should not be treated as interchangeable.

What an audit is designed to address

An audit involves professional judgement, risk assessment and audit procedures directed at obtaining sufficient appropriate audit evidence. The work is performed in accordance with the terms of the engagement and applicable professional standards.

Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit will always detect a material misstatement. Management and those charged with governance remain responsible for the financial statements, the underlying records and the systems of internal control.

Requirements beyond the statutory position

A company's audit requirement is not determined solely by company law. Lenders, grant conditions, shareholder or joint-venture agreements, regulators, tender requirements and counterparties may each call for audited financial statements, and those obligations are often the operative consideration in practice.

Where a company is assessing whether audited financial statements are required for a particular purpose or period, that assessment should be made against the company's own facts, its financing and contractual commitments, and the current requirements that apply to it. The statutory position is administered by the Companies Commission of Malaysia, and the current requirements should be confirmed against SSM's own Companies Act 2016 material rather than a summary published elsewhere.

Independence is considered before and throughout an engagement

For audit engagements, we maintain independence in accordance with the MIA By-Laws (On Professional Ethics, Conduct and Practice).

Whether an audit engagement can be accepted depends on the facts and relationships relevant to the proposed work. Independence is assessed using the applicable professional framework; it is not a statement that can be made in the abstract or assumed from a service description.

Reporting frameworks and group considerations

The applicable financial reporting framework affects the audit approach, the evidence required and the form of the report. Whether MFRS or MPERS applies depends on the entity and its circumstances, including group relationships that may change the position following a transaction or a new investor.

Where the reporting framework itself is the open question, that is addressed separately under accounting and financial reporting. Group structures, component entities, consolidation requirements and reliance on other auditors' work each affect the planning and scope of an engagement, and should be identified early.

Information that helps define the scope

Before an engagement is agreed, it is usually helpful to understand the entity, reporting period, applicable reporting framework, ownership or group structure, intended users of the financial statements, relevant deadlines and the state of the accounting records.

This information helps distinguish the engagement required from other accounting, reporting or advisory support that may also be under consideration.

Discussing an audit requirement

Where a co-operative rather than a company is concerned, the governing statute and timetable differ. Saifudin & Co can discuss the nature of the requirement and whether an engagement may be appropriate. Acceptance, scope, timing, responsibilities and any applicable conditions must be considered from the relevant facts and agreed separately.

This page provides general information only. It does not provide an audit opinion, assurance conclusion or advice on a particular set of facts.