What will the Audit Oversight Board look at in 2026?

One of its inspection focuses in 2026 is how audit firms manage technology risks. Firms are expected to show strong governance, perform a full risk review and take measures to mitigate those risks.

Does using AI change an auditor's responsibilities?

No. The board said the use of AI does not diminish the auditor's responsibility to obtain sufficient appropriate audit evidence and exercise professional scepticism.

Policy & regulation 6 August 2026

Audit Oversight Board to inspect how Malaysian firms manage AI and tech risks

Malaysia's Audit Oversight Board will make technology risk management an inspection focus in 2026 as audit firms use more AI. According to The Edge, its Annual Inspection Report 2025 expects firms to show strong governance, carry out full risk reviews and take steps to reduce those risks.

Key points

Major firms already use AI to analyse contracts, internal audit reports and invoices, extract key data and produce structured tables.
The board said AI does not reduce an auditor's duty to obtain sufficient appropriate evidence and to exercise professional scepticism.
Risks it listed include compromised confidentiality, lost engagement files, software disruption from server outages and bugs, and delays in reporting IT issues.
Audit engagements needing significant improvement fell to 27% in 2025 from 46% a year earlier.

Why it matters for Malaysia

Audited accounts underpin trust in Malaysia's capital market, so regulators want firms' controls to keep up with the tools they adopt. Making this an inspection item turns AI governance into something firms will have to demonstrate.

Questions answered

What will the Audit Oversight Board look at in 2026?: One of its inspection focuses in 2026 is how audit firms manage technology risks. Firms are expected to show strong governance, perform a full risk review and take measures to mitigate those risks.
Does using AI change an auditor's responsibilities?: No. The board said the use of AI does not diminish the auditor's responsibility to obtain sufficient appropriate audit evidence and exercise professional scepticism.

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