Wednesday, 27 July 2016

1MDB accounts "are audited by an international firm" (3)

From my previous posting on this matter:

The Board would like to stress that 1MDB accounts are audited by an international audit firm, Deloitte, " it said in a statement issued in capital Kuala Lumpur tonight.
It said that Deloitte signed off 1MDB’s 2013 and 2014 accounts without qualification and similarly KPMG signed off the 2010, 2011 and 2012 accounts with no qualification.

This subject has suddenly become more interesting, since the news has been published that Deloitte has resigned as an auditor.

1MDB did not give any reason why it held back the news of Deloitte's resignation, which was known for five months, and which seems to be material information.

But then again, transparency was never 1MDB's strongest point.

On top of that:

".... in a separate statement referred to the civil forfeiture complaint filed by the United States Department of Justice (DoJ) on July 20. It said the complaint contains information, which, if known at the time of the 2013 and 2014 audits of 1MDB, would have impacted the financial statements and affected the audit reports."

Despite this "small setback", 1MDB declared:

".... the Board remains confident that no wrongdoing has been committed by 1MDB and that the past audited financial statements continue to show a true and fair view of the company’s affairs at the relevant points in time ......"

That confidence seems highly misplaced given the overwhelming information available pointing to the opposite.

Hopefully one day the Board (and all other parties associated with 1MDB) will be held responsible for its deeds.

The Securities Commission has formed the AOB (Audit Oversight Board), its mission statement:

Fostering high quality independent auditing to promote confidence in the quality and reliability of audited financial statements of public-interest entities and schedule funds in Malaysia.

Over the years many critical articles have been published and dozens of red flags have been spotted regarding 1MDB. How is it possible that three of the highest regarded accounting firms in Malaysia have failed to spot the many relevant issues and have approved the accounts without even a single qualification? These same companies have also audited numerous companies listed on Bursa.

AOB should investigate all that went wrong, the reasons behind it and take appropriate measures.

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