PETALING JAYA: The Securities Commission’s (SC) Audit Oversight Board (AOB) has suspended the registration of audit firm Chengco PLT (CCO) for two years due to serious audit quality issues.

In a statement, the SC said it had also imposed sanctions against five of CCO’s audit partners who were the engagement partners and engagement quality control reviewers (ECQR) of three public interest entities (PIEs).

This entailed the suspension of Hong Thuan Boon and Yap Peng Boon for two years. Further, Tan Wae Leng, Kong Tung Sam and Ng Kee Siang were also prohibited from accepting as clients and auditing any PIEs or scheduled funds for one year.

“The sanctions followed the AOB’s findings of multiple breaches in relation to CCO’s failure to comply with the relevant requirements of the International Standards on Auditing as adopted by the Malaysian Institute of Accountants when auditing the three PIEs,” the SC said.

The SC added the findings were in fundamental and key audit areas.

These include failures to obtain sufficient audit evidence in areas such as bank borrowings, opening balances and prior year adjustments, use of going concern assumption, other payables and accruals, revenue, cost of sales, redeemable convertible preference shares and goodwill.

Also, recurring audit deficiencies were found in the areas of property development costs and fixed deposits.

“In addition, the EQCR failed to sufficiently review key audit documentation, particularly those relating to significant judgements and risk areas. This had an adverse effect on overall audit quality,” the SC said.