In a statement issued today, the Securities Commission (SC) said its audit oversight board (AOB) had also imposed fines amounting to RM52,500 on the duo Charles Lee and Gan Kim Guan.

Lee has been fined RM35,000 and Gan RM17,500. Both are partners in the firm.

The SC said the penalty was imposed as a result of their failure to comply with the relevant international standards on auditing 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 for the financial year ended Dec 31, 2016,” it said.

The commission said 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, who was 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.

It added that the AOB viewed this seriously and reiterated the crucial role of an EQCR in safeguarding the integrity of audit quality and control process.