KUALA LUMPUR (June 12): Chengco PLT has been suspended from registration for two years by Securities Commission Malaysia’s (SC) Audit Oversight Board (AOB) due to serious audit quality issues.

The AOB also imposed sanctions on five of Chengco PLT’s audit partners, who served as engagement partners and engagement quality control reviewers for three unnamed public interest entities, according to a statement from the SC which oversees the AOB.

Hong Thuan Boon and Yap Peng Boon were suspended for two years, while Tan Wae Leng, Kong Tung Sam and Ng Kee Siang were barred for one year from accepting public interest entities or scheduled funds as clients or auditing them.

Chengco’s appeal against the AOB’s enforcement action was dismissed by the SC, with the two-year suspension taking effect on June 12, 2025. The affected partners, meanwhile, did not appeal. Their suspensions and prohibitions took effect on April 30, 2025.

This is the second time Chengco has been sanctioned by the AOB, following a previous enforcement action in 2019. Hong and Yap were also sanctioned in that earlier action.

The latest sanctions followed AOB’s findings of multiple breaches involving Chengco’s failure to comply with international standards adopted by the Malaysian Institute of Accountants during audits of the three public interest entities.

The SC’s definition of public interest entities include listed companies, banks, and insurers.

Among the deficiencies found by AOB were the failure to obtain sufficient audit evidence in areas such as borrowings, opening balances and prior year adjustments, the use of the going concern assumption, other payables and accruals, revenue, cost of sales, convertible preference shares, and goodwill.

The sanctioned Chengco’s auditors also did not sufficiently review key audit documentation, particularly those involving significant judgements and high-risk areas, the SC said. 

“Recurring audit deficiencies were also found in the areas of property development costs and fixed deposits,” the SC added.