June 1, 2019
KUALA LUMPUR – The Securities Commission Malaysia (SC)’s Audit Oversight Board (AOB) on April 5, this year took action against audit firm UHY and its partners, Loh Chye Teik (Loh) and Chan Jee Peng (Chan) for failure to comply with recognised auditing and ethical standards in Malaysia.
UHY and Loh breached the key audit partner rotation requirement of the Malaysian Institute of Accountants’ By-Laws (On Professional Ethics, Conduct and Practice) for the audit of a public interest entity (PIE) for the financial years ended 31st December 2016 and 31st December 2017.
At the time of the audit, an individual cannot be a key audit partner for an audit of a PIE for a period of more than five consecutive years. Loh acted as the engagement partner beyond this stipulated timeframe and UHY failed to identify and address the breach accordingly.
The AOB views the breach seriously as independence and adherence to ethical standards are fundamental requirements of an auditor.
In this respect, the AOB revoked the registration of Loh and fined UHY RM298,000. In addition, other than existing PIE clients, UHY is prohibited from accepting any PIE or schedule fund as a client, or prepare reports in relation to financial information as may be required under the securities laws or guidelines issued by the SC for 12 months from 5 April 2019.
UHY is also required to provide the AOB with an undertaking that it will assess and implement measures to ensure that its system of quality control is operating effectively to monitor and address compliance with audit partner rotation requirements.
Separately, the AOB also fined Chan RM44,000 for failing to perform sufficient audit procedures during the audit of another PIE client of UHY.