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ACCA worked with the Malaysian Institute of Accountants and The Securities Commission Malaysia to explore the impact of the first generation of the Enhanced Auditors’ Report (EAR) issued in Malaysia, focusing on auditors' communication with audit committees, and on the perceptions and behaviour of investors.

Sparking positive change

Most of the audit committee members (78%) and investors (73%) surveyed agreed that the EAR is an improvement over the old format of the auditors' report.

Audit committee discussions about financial reporting risks with auditors and management are more focused and robust, putting audit committees in a stronger position to ensure accountability on behalf of investors.

The audit process has been strengthened through more visible audit partner involvement in discussions with audit committees, due to the need for in-depth deliberation and discussion of KAMs in particular.

Management are making efforts to improve disclosures in the annual report, following discussion about KAMs.

The EAR has improved the relevance and value of the auditors' report. 

The way forward

The EARs' positive impact in the first year of implementation indicates that continued improvement and engagement between all stakeholders should reap significant benefits in enhanced financial reporting and auditing.

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