KUALA LUMPUR (June 26): KPMG Malaysia confirmed it had written to 1Malaysia Development Bhd (1MDB) on June 8 to inform the troubled strategic development company to take immediate steps to prevent any further reliance on the audit reports prepared by it for the financial years ended March 31, 2010 to 31 March 2012 (FY10-FY12).

KPMG was 1MDB's second auditor, after Ernst & Young LLP, whose contract was terminated before 1MDB submitted its first financial statement. KPMG had audited 1MDB's accounts for 2010, 2011 and 2012 before Deloitte took over the auditing of the company's accounts from the former in December 2013. KPMG was sacked as it wanted to issue a qualified audit report for 1MDB's FY13 financial statements.

In a statement today, KPMG Malaysia said during the audit of the financial statements for FY13 on Dec 31, 2013, the firm’s appointment as auditors was terminated by 1MDB and the firm did not have access to information related to 1MDB subsequent to that date.

"The auditor general of Malaysia had carried out a review and audit of issues associated with 1MDB and prepared a report of its findings. This report was classified as secret under the Official Secrets Act 1972, and was recently declassified on May 15.

"Having considered the contents of this report and other relevant information, we had written to 1MDB on June 8 to inform the company [that] it should immediately take all necessary steps to prevent any further or future reliance on the audit reports prepared by KPMG Malaysia for FY10 to FY12," KPMG said.

"KPMG Malaysia has, and continues to, fully cooperate with all relevant authorities investigating matters associated with 1MDB. Given the ongoing investigations by the authorities, it would not be appropriate for us to comment further," it added. 

In a separate statement earlier today, the 1MDB's board of directors revealed it had received a letter from KPMG, informing it to stop using the three audit reports for FY10 to FY12, as it did not provide a true and fair assessment of 1MDB.