KUALA LUMPUR (July 8): The Securities Commission Malaysia’s (SC) Audit Oversight Board (AOB) has taken action against audit firm Jamal, Amin and Partners (JAP), and its partner Ahmad Hilmy Johari, over the provision of prohibited services.

In a statement, SC said JAP and Hilmy had breached a provision of the Malaysian Institute of Accountants by-laws on professional ethics, conduct and practice.

The provision prohibits an audit firm or its audit partner from providing accounting and book keeping services such as preparing financial statements for its audit client.

SC said Hilmy was the engagement partner for the audit of five public interest entities (PIEs) when he prepared the financial statements for them and their subsidiaries.

“The AOB views this non-compliance of ethical standards as a serious offence as it undermines the auditor’s independence and poses a self-review threat,” it added.

The oversight board revoked the registration of Hilmy and imposed a fine of RM400,000 on JAP. The firm is also prohibited from accepting and auditing any PIE or schedule fund for a period of 12 months effective June 30.

Separately, the AOB imposed a fine of RM150,000 and RM50,000 on JAP and Hilmy respectively for breaching the relevant requirements of the International Standards on Auditing in relation to its audit engagement of a PIE client.

JAP is also prohibited  from accepting and auditing any PIE or schedule fund for a period of 12 months  effective from June 30.

“As the engagement partner of a PIE, the AOB found that Hilmy had failed to perform sufficient audit procedures and obtained sufficient audit evidence to support the conclusions reached in the area of fixed deposits, share capital and other reserves, provision for defect liabilities, revenue and cost of sales and group consolidation.

“In most instances, the audit evidence in the audit file is either incomplete or inadequate to support the audit work performed, the basis of judgment applied and the conclusions reached,” said SC.

The commission said JAP and Hilmy had appealed to the body against the AOB’s decisions, but it had dismissed the appeal.