KUALA LUMPUR: The Securities Commission Malaysia’s (SC) Audit Oversight Board (AOB) announced that partners of Kreston John & Gan, Charles Lee King Long and Gan Kim Guan, are prohibited from auditing any public interest entities (PIEs) or schedule funds for 12 months, effective Aug 3, 2022.
In a statement today, the SC said that in addition to the prohibition, the AOB has also imposed fines of RM35,000 on Lee and RM17,500 on Gan.
The AOB’s findings of breaches and sanctions on Lee and Gan for their failure to comply with the relevant International Standards on Auditing (ISA) when auditing a PIE were made after the due process accorded to them including an opportunity for them to appeal against the SC’s decision.
"As an engagement partner for a PIE client, Lee had wrongfully assessed the PIE’s reversion from the Malaysian Financial Reporting Standards (MFRS) accounting framework to Financial Reporting Standards (FRS) for the financial year ended Dec 31, 2016,” the SC said.
The commission said the reversion was found to be inappropriate and inconsistent with the implementation of MFRS by the Malaysian Accounting Standards Board.
Lee had also failed to perform audit procedures on various elements of accounting estimates relating to property development costs and failed to obtain appropriate audit evidence to support the conclusions reached, according to the SC.
In many instances, the documentation in support of the conclusions reached by Lee was found to be either incomplete or inadequate, it added.
The SC also said that Gan, as the Engagement Quality Control Reviewer (EQCR), had failed to sufficiently review the selected audit documentation relating to significant judgements and risk areas of the engagement and the basis of the conclusions reached.
This was apparent in the application of the accounting framework, property development costs, trade receivables, revenue and going concern, the SC said.
It noted that the AOB views this seriously and reiterates the crucial role of EQCR in safeguarding the integrity of the audit quality and control process. - Bernama
