SC Suspends Audit Firm Chengco And Sanctions Auditors
The Securities Commission Malaysia's Audit Oversight Board (AOB) has suspended the registration of audit firm Chengco PLT for two years due to serious audit quality issues. This enforcement action, which took effect from June 12, 2025, follows the SC's dismissal of CCO's appeal, affirming the AOB's decision.
In addition to the firm's suspension, the AOB also imposed sanctions on five of CCO's audit partners. These partners had served as engagement partners and engagement quality control reviewers (EQCR) for three public interest entities (PIEs).
SC has also suspended Hong Thuan Boon and Yap Peng Boon for two years and separately, Tan Wae Leng, Kong Tung Sam, and Ng Kee Siang are prohibited from accepting as clients and auditing any PIEs or scheduled funds for one year. The suspensions and prohibitions for these partners were effective concurrently from April 30, 2025, as they did not appeal the AOB's enforcement action.
The sanctions stem from the AOB's findings of multiple breaches related to CCO's failure to comply with the International Standards on Auditing (ISA), as adopted by the Malaysian Institute of Accountants (MIA), during their audits of the three PIEs. The AOB highlighted that these findings were in fundamental and key audit areas.
Furthermore, the AOB identified recurring audit deficiencies in areas such as property development costs and fixed deposits. A significant concern raised was the EQCR's failure to sufficiently review key audit documentation, particularly those related to significant judgements and risk areas, which adversely impacted overall audit quality.
These deficiencies were found to be prevalent across multiple audit engagements inspected and some were recurring issues from a past AOB inspection on CCO in 2019. Despite being previously sanctioned in 2019, CCO failed to demonstrate any significant improvement in its overall audit quality. It was also noted that Hong Thuan Boon and Yap Peng Boon had also been previously sanctioned by the AOB in 2019. Related
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