Bangkok, July 8, 2016 – The SEC Independent Audit Inspection Activities Reports for the second-cycle period during 2013-2015 have shown significant progress in the quality control system of audit firms and the audit work quality of listed companies.
Senior Assistant Secretary-General Prakid Punyashthiti said: “The overall results of the second-cycle inspection show continued improvement in the work of all 25 audit firms and individual approved auditors. The average score weighed against the total market capitalization was 1.64, compared to 1.79 in the first-cycle inspection during 2010-2012.” [The average scores range from 5 (the lowest) to 1 (the highest)].
Major issues found among the inspected audit firms included non-compliance with auditing standards and inefficient work monitoring system. However, their listed company clients accounted for only 10 percent of the total market capitalization. At engagement levels, significant deficiencies were such as audits of revenue recognition under percentage of completion method and audits of inventory and cost of sales.
These independent audit inspection results could be useful for audit committees when selecting audit firms for listed companies in the future. They could also be a guideline for addressing issues in the financial reporting ecosystem as well as improving the supervisory system and the quality inspection of the approved auditors. These ongoing efforts have contributed to the increasing recognition of the Thai capital market in the European Union, and thereby Thai listed companies are allowed to raise fund in the EU market and use Thai auditors to audit their financial statements. This could streamline the overall process and reduce costs for Thai issuers as well.
“We encourage listed companies to give more weight to the quality of audit firms and performance of individual auditors instead of solely focusing on audit fees. In the long run, a reliable quality control system would support auditors and their teams in providing high quality audit work. This means audit committees would be able to do their job more efficiently as well,” Mr. Prakid said.
Creating a well-balanced and sustainable ecosystem for financial reporting of listed companies is an important part of the SEC’s mission. Training, workshops and knowledge-sharing on accounting issues are organized regularly for preparers of financial reports and responsible persons such as chief executive officers, chief financial officers and chief accountants. This is to make sure that they understand their roles, duties and responsibilities from the start, as far as financial reporting standards are concerned, to provide high quality, reliable financial information of listed companies for investors and other stakeholders.
The third-cycle inspection during 2016-2018 continues to focus on auditor supervision and audit quality promotion. Among other key activities, the SEC will cooperate with the Federation of Accounting Professions under the Patronage of His Majesty the King (FAP) to provide experts’ advice on possible solutions for correcting audit work deficiencies.
Note:
- The Independent Audit Inspection Activities Reports from 1 January 2013 to 31 December 2015 can be downloaded from the SEC website at http://www.sec.or.th/TH/RaisingFunds/EquityDebt/Documents/activities_report_th_2558.pdf
- For more information and requests for the print version, please call 0-2263-6082 or 0-2263-6218 or email: oca@sec.or.th.
