(May 27): A DAP lawmaker today filed a complaint against international auditor Deloitte and its audit partner Ng Yee Hong for failing to conduct a thorough audit on debt-ridden 1Malaysia Development Berhad (1MDB).

Petaling Jaya Utara MP Tony Pua said the complaint lodged at the Malaysia Institute of Accountants was over the audit of 1MDB for March 2013 and 2014.

"Among the reasons I decided to proceed with an official complaint against Deloitte is because both the prime minister and board of directors of 1MDB have been using Deloitte as a shield to defend and justify the state of 1MDB today," he said at the Malaysian Institute of Accountants (MIA) office in Kuala Lumpur this afternoon.

Pua said Deloitte Malaysia intentionally or negligently failed to conduct sufficient and necessary due diligence and audit of the cash flow and liquidity risk of 1MDB.

"Deloitte signed off and endorsed 1MDB as a going concern on November 5, 2014 despite the company facing an imminent liquidity crisis, as exposed before the end of the month when it was unable to repay its RM2 billion debt.”

"So something must have been wrong. They didn’t do their audit properly."

Pua’s other allegations were on Deloitte's failure to conduct sufficient and necessary due diligence and audit of 1MDB's level 3 assets, and failure to perform the above based on its duties and obligations as an independent external auditor in 2013 and 2014.

"Given the size of the level 3 assets, any discrepancy in the valuation will have a massive impact on the financial status of 1MDB, given the size and material amount in this level 3 asset.

"Why didn't Deloitte conduct greater due diligence on these assets, this was shown where 1MDB had difficulties redeeming its investment from Cayman Islands."

On Deloitte's failure to report the highly dubious and potentially fraudulent transactions in 1MDB to the authorities, Pua said under the International Standards on Auditing (ISA) 240 adopted by the MIA in 2010, it was 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.

"We hope with the complaints we made, MIA will investigate the complaints against Deloitte and its partner," he said.

"We will wait for the outcome of the investigation... I was informed that investigations into the previous complaints are ongoing, and they are waiting for response from KPMG.

Pua had in March lodged a complaint against KPMG, which audited 1MDB's accounts between 2010 and 2012.

The complaint was over allegations that KPMG had backdated 1MDB's deal with PetroSaudi to hide information from its financial report.

Deloitte is 1MDB's third auditor since it was set up in 2009 to spearhead development in strategic sectors. 1MDB's main business is in property development and utilities, such as power plants.

Prime Minister Datuk Seri Najib Razak recently told a group of former Barisan Nasional lawmakers that Deloitte would not have signed off on 1MDB's accounts if they discovered RM42 billion was lost by the government-owned strategic investor.

"There isn't any RM42 billion that has disappeared because the accounts were audited by Deloitte," Najib said.

“Auditors will not sign if even RM1 million is missing. Now it is said that RM42 billion has vanished. How can it vanish? It hasn't vanished, there are assets, there are liabilities." – The Malaysian Insider