KUALA LUMPUR (June 21): From early April to end-June, Chengco PLT resigned as auditors from as many as 35 public listed companies as a result of it being suspended for a two-year period by the Securities Commission Malaysia’s Audit Oversight Board (AOB).

The AOB among others alleged “serious audit quality issues” with Chengco’s work.

As a result, two of Chengco’s audit partners were suspended for two years, while another three partners were prohibited from accepting as clients and auditing any public interest entities or scheduled funds for a one-year period.

Interestingly, almost all the 35 companies from which Chengco resigned from recently are not doing well financially. They appear to have a penchant for large cash calls, raising funds via private placements and rights issues, and employee share option schemes (ESOS), among others.

Some of these companies seem prone to changing their financial year end, and may do so again now that their auditors have been reprimanded and unable to continue to audit them.

While the spotlight is currently on Chengco and the companies it audited, the AOB says in response to questions from The Edge that it is the primarily the responsibility of the board of directors and management of the public interest entities to ensure that their financial statements are accurate, reliable and presented fairly in accordance with applicable accounting standards.

The AOB however adds that when audit deficiencies are found, the audit firm is expected to evaluate the implications of the relevant audits and if needed undertake corrective action.

This week’s cover story takes a closer look at some of the 35 PLCs.

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