KUALA LUMPUR (Aug 27): The Securities Commission Malaysia’s Audit Oversight Board (SC's AOB) has imposed fines of RM150,000 on Grant Thornton Malaysia PLT (GTM) and RM37,500 on its audit partner Mohamad Heizrin Sukiman, for failure to comply with a key audit partner rotation requirement.

In a statement on Tuesday, the regulator said: "Heizrin had breached the key requirement of the Malaysian Institute of Accountants’ (MIA) by-laws (on professional ethics, conduct and practice) during the transition period of the revised MIA by-laws."

The regulator said Heizrin was an engagement partner and engagement quality reviewer of the audit of a public interest entity (PIE) from 2013 to 2017, after which he was required to serve a minimum cooling-off period of three consecutive years. 

"But he failed to do so, and as a result was involved in the audit of the PIE for more than seven years," the AOB said.

The regulator said the MIA's by-laws stipulate that an audit engagement partner shall not be involved in an audit engagement for a cumulative period of more than seven years to ensure audit independence. 

"The AOB views the breach seriously, as auditors’ independence and compliance with ethical standards are fundamental requirements for the audit profession," it added.

GTM failed to meet the quality objectives of the International Standard on Quality Management (ISQM) 1 as adopted by the MIA, specifically on non-compliance with relevant ethical requirements, including those related to independence (the MIA's by-laws). GTM and Heizrin had appealed to the SC against the AOB’s enforcement action. The SC heard the appeal, and after due process, affirmed the AOB’s decision.