KUALA LUMPUR (June 13): Chengco PLT said it has taken corrective steps to strengthen its audit framework after the Securities Commission Malaysia's Audit Oversight Board (AOB) suspended the firm's registration for two years due to "serious audit quality issues".
While acknowledging the impact on its public interest entity (PIE) audit services, the firm said it is assisting affected clients with an orderly transition and committed to minimising any potential delay to financial reporting timelines.
“Our team has been working closely with each client to facilitate the transfer of audit files and provide any necessary support during this period,” it said in a statement on Friday.
Nonetheless, the firm clarified that all other operations, including audits of non-listed entities, remain fully operational.
The AOB, in announcing Chengco's suspension on Thursday, also imposed a two-year suspension on Chengco’s audit partners Hong Thuan Boon and Yap Peng Boon.
Three other partners — Tan Wae Leng, Kong Tung Sam and Ng Kee Siang — were prohibited from accepting as clients and auditing any PIE for one year, with effect from April 30.
Chengco, in its statement, noted that the suspension followed a 2023 review that identified recurring deficiencies in its compliance with International Standards on Auditing and Quality Control.
The firm said it has implemented a systematic enhancement programme, strengthening its quality management framework, elevating control processes and embedding continuous professional development across its practice following the AOB’s initial findings.
“We deeply regret the oversights that led to this suspension and we are fully dedicated to restoring trust through steadfast adherence to quality standards, transparency, and unwavering professionalism,” it added.
Chengco previously faced sanctions by the AOB in 2019. Hong and Yap were also sanctioned in that action.
The latest sanctions followed the 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 PIEs.
Among the deficiencies found by the board were a 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 AOB's definition of PIEs include listed companies, banks and insurers.