The Securities Commission Malaysia’s Audit Oversight Board (AOB) today released its Annual Inspection Report 2025, highlighting the need for continued improvements in audit quality. The report also recognised ongoing efforts by audit firms to strengthen governance, transparency and quality management practices.
As at 31 December 2025, 41 audit firms and 397 individual auditors were regulated by the AOB. In 2025, the AOB inspected 14 audit firms, 40 individual auditors and 41 audit engagements across a range of industries and risk areas. The report highlights encouraging progress in audit quality, with the proportion of audit engagements requiring significant improvements declining from 46% in 2024 to 27% in 2026.
However, a recurring trend of deficiencies were still observed in areas such as accounting estimates, sampling, internal control testing and revenue recognition. The AOB conducted its Audit Firm Culture Assessment, which surveyed 4,092 respondents across all nine Major Audit Firms. While the assessment found strong ethical behaviour, consultation practices, compliance and professional challenge, it also highlighted the need for firms to address workforce-related challenges, including workload pressures, staffing, remuneration and talent retention.
The report also highlighted that several Major Audit Firms have begun deploying artificial intelligence (AI)-powered tools to support document analysis, compliance assessments and audit documentation. As firms advance their digital capabilities, the AOB emphasises the importance of effective technology risk management and appropriate governance over the use of technology.
