8/24/2018 Two years on, MIA probe on 1MDB ex-auditors still ongoing

MAL AYSIAKINI
NEWS

Two years on, MIA probe on 1MDB ex-

auditors still ongoing
Published: 23 Aug 2018, 7:12 pm  |  Modified: 23 Aug 2018, 7:26 pm

The Malaysian Institute of Accountants' (MIA) investigation on two former 1MDB auditors is
still ongoing - two years since the investigation started.

According to a report by The Star today, the MIA had started the investigation in mid-2016
and are still determining whether KPMG and Deloitte had breached the Accountants Act
1967 when they signed off on 1MDB’s accounts on 2009 and 2014.

“There are complaints lodged against KPMG and Deloitte and we are investigating the
auditors in question. The complaints are on the auditors and it is ongoing,” MIA chief
executive officer Nurmazilah Mahzan was quoted as saying.

Nurmazilah said the MIA - which regulates the accounting profession - could not determine
at this stage when the investigation would be completed.

She reportedly said that the findings of the investigations will be studied by a committee.

If the auditors are found guilty or if there is a basis to the complaints against the auditors,
then the MIA would have to wait for the decision of its disciplinary committee.

The report also quoted MIA executive director for surveillance and enforcement,
Muhammad Redzuan Abdullah saying that the investigations are now at the disciplinary
committee level.
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8/24/2018 Ernst & Young (EY) was 1MDB’sTwo
first auditor
years on, MIAwhen the1MDB
probe on state investment
ex-auditors fund was set up in
still ongoing

2009, but resigned without signing off on any of 1MDB’s accounts.

KPMG stepped in after the resignation and signed off on 1MDB’s accounts for the financial
years ending March 31 in 2010, 2011, and 2012, without qualification from auditors.

Deloitte took over from KMPG in December 2013 after 1MDB contended that KPMG could
not conclude its 2013 accounts.

Deloitte then signed off on 1MDB’s 2013 and 2014 accounts without qualification.

In light of the US Department of Justice’s 2016 allegations of misappropriation at 1MDB

however, Deloitte made the “unusual” move to announce those accounts should not be
relied on until those allegations are determined in court.

Previously, the Public Accounts Committee (PAC) had found that 1MDB - particularly its sole
shareholder Minister of Finance Incorporated (MOF Inc), then headed by Prime Minister
Najib Abdul Razak - had been terminating its auditors once they insisted upon seeing
certain documents.

The PAC report on its investigation on 1MDB found that EY had requested several
documents in March 2010 to ascertain the value of assets and liabilities in 1MDB’s joint
venture with Petrosaudi International.

After EY had insisted on the documents on several occasions, the report said, “Messers EY's
stance has caused unease to 1MDB's management and the shareholder and board of
directors decided to terminate EY's services.”

As for KPMG, the PAC said the audit firm was planning to issue a qualified audit report for
the 2013 financial year when 1MDB abruptly replaced it with Deloitte.

The decision to issue a qualified audit report followed 1MDB’s failure to provide KPMG
auditors with adequate documentary evidence of the value of its investments in the
Cayman Islands, but the MOF Inc terminated KPMG’s contract before the report was issued.
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8/24/2018 In accounting parlance, a qualified audit
Two years on,opinion
MIA probemeans that
on 1MDB accounting
ex-auditors best-practices have
still ongoing

not been adhered to, but no misrepresentation had been found in a company's financial
report.

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