KUALA LUMPUR: The Securities Commission Malaysia's Audit Oversight Board (AOB) announced that Charles Lee King Long and Gan Kim Guan, partners of Kreston John & Gan are prohibited from accepting and auditing any public interest entities (PIEs) or schedule funds for 12 months effective from Aug 3, 2022.
In addition to the prohibition, the AOB has also imposed fines of RM35,000 on Lee and RM17,500 on Gan.
The Securities Commission Malaysia (SC), in a statement today, said this followed the failure by Lee and Gan in complying with the relevant International Standards on Auditing (ISA) when auditing a PIE.
"As an engagement partner for a PIE client, Lee had wrongfully assessed the PIE's reversion from Malaysian Financial Reporting Standards (MFRS) accounting framework to Financial Reporting Standards (FRS) for the financial year ended Dec 31, 2016," it said.
The commission said that 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 also 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.
Gan, the Engagement Quality Control Reviewer (EQCR), had failed to sufficiently review the selected audit documentation relating to significant judgments and significant risk areas of the engagement and basis of the conclusions reached.
This was apparent in the application of the accounting framework, property development costs, trade receivables, revenue and going concern, it said, adding that the AOB viewed this seriously and reiterated the crucial role of EQCR in safeguarding the integrity of audit quality and control process.