By MIA SMP Department

First introduced in 2016 as one of the initiatives under the SMP Roadmap 2015-2020, Quality Assessment Programme (QAP) is an initiative of the MIA’s Small and Medium Practices Committee, in collaboration with The Malaysian Institute of Certified Public Accountants (MICPA), to promote continuous improvement in audit quality in Malaysia. QAP assists Small and Medium Practices (SMPs) in assessing compliance with the applicable auditing standards and MIA By-laws, in relation to audit engagements on financial statements prepared in accordance with the applicable approved accounting standards and the Companies Act 2016.

It has been more than 6 years since the inception of QAP, whereby the MIA-MICPA QAP agreement was signed on 25 October 2016 under certain regulatory environment. As part of our commitment to continuous improvement, several changes have been carried out in ensuring that QAP will remain relevant. Below are the enhancements that have been made as well as those in the pipeline.

Change in the report format submitted to MIA

Since the commencement of the QAP until March 2022, MICPA had been forwarding the final report issued after the conclusion of a QAP in which an audit firm participates to the Small and Medium Practices (SMP) Department of MIA, in order for MIA to monitor the effectiveness of the QAP. The final reports which entailed the findings of the review and remediation action plan could only be accessed by the staff of the SMP Department. The overall findings from  the final reports would then be compiled and shared as appropriate in an e-AT article such as “Quality Assessment Programme: Common Findings of the Firm-level and Engagement-level Review” issued in June 2022, which covered the common findings garnered and observed from the completed reviews since the introduction of the QAP until May 2022.

Even though there is restricted access to the final reports, some audit firms considered the matter of confidentiality as a deterrent to participating in the QAP. Hence, beginning April 2022, it has been agreed that MICPA will only forward the summarised report to MIA, as a mechanism for MIA to assess the effectiveness of the QAP and at the same time to provide comfort to participating firms on the confidentiality of information, especially since this is a voluntary exercise.

In comparison with the detailed final reports, the summarised report will only contain the key findings of the functional review of ISQC 1 and the detailed review of the audit engagement without specific or contextualised information about the key findings.

Capping of maximum fee for participation in the QAP

Taking cognisance that practitioners are still navigating away from the aftermath of the pandemic and to enable more audit firms to participate in the QAP, the maximum fee for participation has now been reduced from RM10,000 to RM6,000 and will be valid until 30 June 2024.  This update was conveyed through a notice to all audit firms dated 18 August 2022. 

Audit firms are urged to seize the opportunity to participate in the QAP at a reduced fee while this rate is still on offer. 

(Note: The maximum fee excludes out-of-pocket disbursements and Sales and Services Tax)

Quality Improvement Period

In a notice to all audit firms on 18 August 2022, the Institute announced that audit firms that have participated in the QAP will be given time for quality improvement and will not be selected for MIA Practice Review at least within the 12 months after the completion of the QAP. The completion date of the QAP will be the date of the final report issued to participating firms. This is to provide participating audit firms with a reasonable period for them to execute the remediation action plan as recommended in their QAP final report.

Subsequently, the improvement period was revisited to allow for a longer improvement period and from April 2023 onwards, the improvement period has been increased to 24 months after the completion of the QAP, provided the whole process (starting from the audit firm’s enrolment in the QAP Programme) does not exceed 36 months.

(Note: Under normal circumstances, QAP participating firms will not be selected for practice review by MIA during the 24-month improvement period, except for firms referred by other regulators for inspection/investigation/disciplinary action or arising from a risk-based assessment.)

Change from functional review of ISQC 1 to ISQM1 (In the pipeline)

As of 15 December 2022, ISQM 1 replaced ISQC 1. The QAP will need to be tailored for ISQM 1 moving forward and hence, requires a change in the review programme. MICPA, as the main coordinator of the QAP, is presently revamping the functional review methodology.

Will there be a revision of fees? Yes, there will be an additional RM500 increase in the total maximum fee due to the expected increase in man hours required to review the ISQM 1 due to additional elements if compared with ISQC 1. 

The functional review of ISQM 1 is expected to be rolled out in Quarter 4 of 2023. MIA will inform audit firms when the arrangement has been finalised. Do watch out for email blasts from MIA and also updates through the social media, especially the Telegram channel for the SMPs (MIA SMPs Channel).

While several audit firms have already benefitted from QAP participation, the Institute would exhort greater participation by audit firms in the QAP to leverage on the opportunity to improve audit quality. SMPs, especially new audit firms or firms that have yet to undergo practice review, should undertake pro-active steps to identify areas for improvement while setting the right progressive tone for the firms by participating in the QAP.

MIA will continue to pursue initiatives to support audit firms in their quest for continuous improvement in audit quality. For suggestions or feedback on QAP, please submit your ideas or comments through email at [email protected]

Interested to learn more about QAP?

Please click here for more information about QAP.

Testimonials from participating firms, detailed processes, charges and the comparison between practice review and QAP can be found in the following e-AT articles:

Interested to participate in QAP?

Interested firms are required to complete the Practice Profile Information Questionnaire by clicking here and forwarding the completed questionnaire to the SMP Department at [email protected]. The questionnaire will enable the QAP reviewer(s) to understand your practice better. 

For further enquiries on the QAP, please contact MIA SMP Department at [email protected]

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