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New Straits Times

AOB suspends Chengco, sanctions auditors from auditing

KUALA LUMPUR: The Securities Commission's Audit Oversight Board (AOB) has suspended the registration of Chengco PLT for two years due to serious audit quality issues. The AOB also imposed sanctions against five of Chengco's audit partners who were the engagement partners and engagement quality control reviewers (ECQR) of three public interest entities (PIEs). It suspended Hong Thuan Boon and Yap Peng Boon for two years. It also prohibited Tan Wae Leng, Kong Tung Sam and Ng Kee Siang from accepting as clients and auditing any PIEs or schedule funds for one year. The sanctions followed the AOB's findings of multiple breaches in relation to Chengco's failure to comply with the relevant requirements of the International Standards on Auditing (ISA) as adopted by the Malaysian Institute of Accountants (MIA) when auditing the three PIEs. Further, the findings were in fundamental and key audit areas. These include failures to obtain sufficient audit evidence in areas such as bank borrowings, opening balances and prior year adjustments, use of going concern assumption, other payables and accruals, revenue, cost of sales, redeemable convertible preference shares and goodwill. Recurring audit deficiencies were also found in the areas of property development costs and fixed deposits. In addition, the EQCR failed to sufficiently review key audit documentation, particularly those relating to significant judgements and risk areas. This had an adverse effect on overall audit quality. "These findings were prevalent across the audit engagements inspected and some were recurring from the AOB's past inspection on Chengco. "Despite being previously sanctioned by the AOB in 2019, Chengco failed to demonstrate an improvement in overall audit quality," it said. Hong and Yap were also previously sanctioned by the AOB in 2019. Chengco had appealed to the SC against the AOB's enforcement action, it said. The SC dismissed the appeal and affirmed the AOB's decision. The suspension took effect from June 12 2025. The affected partners did not appeal the AOB's enforcement action. Their suspensions and prohibitions were effective concurrently from wApril 30 2025.