The AOB also imposed a RM50,000 fine on Chia, and RM25,000 fine on Tai, the SC said in a statement today.

According to the SC, Chia – the engagement partner – failed to assess the appropriateness of the PIE capitalising a significant amount of consultation fees as deferred expenditure in accordance with Malaysian Financial Reporting Standards (MFRS) 138 requirements.

“Chia had also failed to obtain sufficient appropriate audit evidence to verify a significant number of transactions with incomplete records of deferred expenditure,” it said, adding that no alternative audit procedures were performed to verify these incomplete records.

The deferred expenditure was subsequently reclassified as non-current assets held for sale.

“Chia again failed to assess the appropriateness of the PIE classifying the deferred expenditure as non-current assets held for sale in accordance with MFRS 5 requirements.

Tai, the engagement quality control reviewer, had failed to sufficiently review the selected audit documentation relating to significant judgements and significant risk areas of the engagement and basis of the conclusions reached.

The audit deficiencies, which the AOB had discovered, had affected the overall audit quality.

“The sanctions were imposed after due process, including the appeal process, accorded to them,” AOB added.