THE Securities Commission (SC) Malaysia’s Audit Oversight Board (AOB) today announced that Ong & Wong Chartered Accountants and three of its audit partners are prohibited from accepting and auditing any public interest entities (PIEs) or scheduling funds for a 12-month period starting Sept 7, 2022.
The three audit partners are Ong Koon Liang, Ong Kong Lai and Wong Cham Mew.
Additionally, the AOB imposed fines of RM227,000 on Ong & Wong, RM35,000 each on Koon Liang and Kong Lai and RM34,000 on Cham Mew.
“Based on the AOB’s inquiry findings, Ong & Wong and the three audit partners were found to have failed to comply with the relevant International Standards on Auditing (ISA) and International Standard of Quality Control (ISQC) 1 when auditing two PIE clients (PIE 1 and PIE 2),” the AOB said in a statement.
The AOB found numerous audit deficiencies in the engagement reviews of the two PIE clients, which were led by Koon Liang and Kong Lai, respectively, as the engagement partners.
These deficiencies, among others, relate to the sufficiency and appropriateness of the audit evidence obtained and the completeness of audit documentation to support the conclusions reached, specifically in areas of revenue, trade receivables, deposits, amount owing to the director, group consolidation, property, plant and equipment, cash and bank balances and other receivables.
Additionally, in the audit of PIE 2, where the subsidiaries operate in a foreign country, the AOB noted issues concerning the reliability of documents and the audit team’s control over the trade receivables confirmation, where requests were made and received through the management of PIE 2 in contravention of the relevant ISA.
“Cham Mew, the engagement quality control reviewer (EQCR) for both the PIEs, had failed to sufficiently review the selected audit documentation relating to significant judgments and risk areas of the engagement as well as the basis of the conclusions reached,” the AOB noted.
“Multiple audit deficiencies”
“This affected the overall audit quality, as evidenced by the multiple audit deficiencies discovered in the two audits performed.”
As for the breaches by Ong & Wong, the AOB said the chartered accountants group failed to comply with the relevant requirements of ISQC 1.
In particular, the firm failed to ensure that its quality control monitoring system operated effectively, resulting in its failure to detect the audit deficiencies found in the audits of the two PIE clients.
“In addition, the audit deficiencies found in the audit of PIE 2 raised concerns (about) the audit firm’s understanding and knowledge in performing audit(s) in a foreign country and meeting the relevant audit requirements in the foreign country,” the AOB added.
The AOB stressed that auditors must be familiar with and adhere to the laws, regulations and reporting requirements of foreign jurisdictions when performing audits of an entity outside Malaysia.
“The AOB also reiterates the crucial role of EQCR in safeguarding the integrity of audit quality and control process.”
It also clarified that its sanctions against Ong & Wong and its auditors were imposed after due process accorded to them, which included the opportunity for them to appeal against the AOB’s decisions.
The AOB, however, did not say if the firm and the three auditors had appealed earlier decisions by the AOB or the status of such decisions. – Oct 17, 2022