Pua : Will Deloitte lodge complaint against 1MDB with RoC?

KUALA LUMPUR: Deloitte Malaysia cannot wash its hands off 1MDB’s accounts just by announcing that they (accounts) “could not be relied upon”, cautioned Petaling Jaya Utara MP Tony Pua in a statement.

He referred to the Companies Act on the matter.

If an auditor, in the course of the performance of his duties as auditor of a company, discovers that there has been a breach or non-observance of any of the provisions of the Companies Act, he must “report the matter in writing to the Registrar (of Companies)”, pointed out the MP who is also DAP National Publicity Secretary.

These refer to matters not “adequately dealt” with by the company’s directors and management, he added. “Such a ‘breach or non-observance’ would include fraud and dishonesty.”

The penalty for failing to do so would be “imprisonment for two years or RM30,000 or both”, stressed Pua.

Pua wants to know whether Deloitte will, as required by law, complain on the matter to the Registrar of Companies.

“It has to do this since it has finally decided that it may have been defrauded by 1MDB (on the audit).”

He warned that failure by Deloitte to act appropriately on the matter would certainly damage the trust that shareholders of companies have in Deloitte.

“This is to carry out audits diligently and professionally to protect their interest, especially in the light of fraud and embezzlement by company officials.”

Deloitte should also have filed reports against 1MDB with the authorities concerned on the potential fraud which has taken place in the company, continued Pua.

“This has already led them to disown 1MDB’s audited accounts for the financial years ending March 2013 and 2014.”

On 27 July this year, a week after the US Department of Justice (DoJ) laid out charges against Jho Low and Riza Aziz, alleging that more than USD3.5 billion had been misappropriated from 1MDB, Deloitte officially disowned the accounts it signed for 2013 and 2014.

Pua recalled that he had also filed a complaint against Deloitte in May last year “for failing to carry out its auditing duties professionally”.

One of the key accusations made was that Deloitte “intentionally and/or negligently failed to report the highly dubious and potentially fraudulent transactions in 1MDB to alert the relevant authorities”.

He cited the International Standards on Auditing (ISA) 240 adopted by the Malaysian Institute of Accountants (MIA) in 2010.

Under ISA 240, it’s the responsibility of the Auditors “to maintain professional scepticism throughout the audit” and to identify and assess “the risks of material misstatement due to fraud”.

The ISA further states, “for significant transactions that are outside the normal course of business for the entity… the auditor shall evaluate whether the business rationale (or the lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets”.

When Deloitte testified before the Public Accounts Committee (PAC) in June last year, it insisted it had carried out its duties professionally and fervently stood by the signed off accounts as true and correct, reminded Pua. “This was despite the various doubts and controversies which had arisen.”

One controversy arose when 1MDB could not repay a RM2 billon loan less than a month after Deloitte declared in November 2014 that the state-owned company was fully able to meet its debt and obligations.