PETALING JAYA: The Securities Commission Malaysia’s (SC) Audit Oversight Board (AOB) recently took action against audit firm Jamal, Amin and Partners (JAP), and its partner Ahmad Hilmy Johari for failing to comply with AOB’s registration condition, which among others, require registered auditors to meet international auditing and ethical standards.
JAP and Hilmy breached the Malaysian Institute of Accountants (MIA) By-Laws on Professional Ethics, Conduct and Practice relating to the provision of prohibited services. Under Section R601.6 of MIA By-Laws, an audit firm or its audit partner is prohibited from providing accounting and book keeping services such as preparing financial statements for its audit client.
Hilmy was the engagement partner for the audit of five public interest entities (PIEs) when he prepared the financial statements for these PIEs and its subsidiaries.
The AOB views this non-compliance of ethical standards as a serious offence as it undermines the auditor’s independence and poses a self-review threat.
In this respect, the AOB revoked the registration of Hilmy and imposed a fine of RM400,000 on JAP. The firm is also prohibited from accepting and auditing any PIE or schedule fund for a period of 12 months effective June 30.
Separately, the AOB imposed a fine of RM150,000 and RM50,000 on JAP and Hilmy respectively for breaching the relevant requirements of the International Standards on Auditing in relation to its audit engagement of a PIE client. JAP is also prohibited from accepting and auditing any PIE or schedule fund for a period of 12 months effective from June 30.
As the engagement partner of a PIE, AOB found that Hilmy had failed to perform sufficient audit procedures and obtained sufficient audit evidence to support the conclusions reached in the area of fixed deposits, share capital and other reserves, provision for defect liabilities, revenue and cost of sales and group consolidation. In most instances, the audit evidences in the audit file are either incomplete or inadequate to support the audit work performed, the basis of judgment applied and the conclusions reached.
