Thursday, June 11, 2015

Time is Running Out - Deloitte Audit Delays Arouses Suspicion

Dato’ Seri Najib Razak must explain why 1Malaysia Development Bhd (1MDB) has not instructed Deloitte Malaysia to commence their audit for the financial year ending 31 March 2015.

As disclosed by Public Accounts Committee Chairman, Datuk Nur Jazlan yesterday, Deloitte Malaysia has not been allowed to commence the statutory audit of 1MDB’s financial statement for the year ending 31 March 2015.

The discovery that the audit has yet to commence is highly surprising given that normally the audit work for the company the size of 1MDB would have started as early as 3 to 4 months before the financial year end.

However, 1MDB is already more than 2 months past the 31 March financial year end for this year and yet no work has been started at all by the auditors on the holding company. No dates have also been set by the company or by its sole shareholder, Ministry of Finance for the audit to begin.

Given the size and complexity of the company, it is once again assured that 1MDB will be late for the submission of its financial statements to the Companies Commission. Clause 169(1) of the Companies Act states very clearly that a companies’ audited report must be lodged with the Commission within 6 months after the financial year end.

In fact, under Clause 171(1), the Act dictates imprisonment for 5 years or RM30,000 “if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company… has by his own wilful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act.”

Hence the Ministry of Finance and directors of the company are wilfully flouting the law by refusing to allow Deloitte to commence the audit of the company, which will result in the failure by the company to submit its accounts by the 30 September 2015 due date.

We call upon the Companies Commission not to grant any extension to 1MDB as it did in the past to submit its annual returns because the delays are purely because of 1MDB’s explicit decision delay the audit exercise. In addition, if 1MDB did indeed fail to submit their accounts by the due date, the Directors of the company must face the full weight of the law. There should be no bias or favours granted to the Directors of 1MDB under such circumstances.

We would also call upon the Prime Minister to immediate demand that 1MDB allow Deloitte to carry out their audit exercise immediately to protect the reputation of the Finance Ministry and to uphold good corporate governance and financial integrity in 1MDB.

Surely given the number of times Dato’ Seri Najib Razak has used the good name of Deloitte to justify the financial state of 1MDB as at 31 March 2014, he would welcome the audit to be carried out to prove that 1MDB continues to remain not only a going concern, but a strong company with huge potential as at the financial year end 31 March 2015.

Tony Pua

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