This article first appeared in The Edge Financial Daily on December 4, 2019

KUALA LUMPUR: XiDeLang Holdings Ltd said its auditor Afrizan Tarmili Khairul Azhar has resigned with immediate effect, due to sanctions imposed on the auditor for non-compliance with auditing standards by the Securities Commission Malaysia (SC)’s Audit Oversight Board (AOB).

Afrizan was previously reappointed as XiDeLang’s auditor at its 10th annual general meeting on June 20, 2019.

“The resignation of Afrizan was due to the sanctions imposed upon them by the Audit Oversight Board which, inter alia, prohibits them from auditing the financial statements of a public interest entity for 12 months with effect from Nov 25, 2019,” XiDeLang, which manufactures footwear, said in a filing with Bursa Malaysia yesterday.

On Nov 25, the SC announced that AOB had prohibited the audit firm and its partners from accepting clients and auditing public interest entities or schedule funds, for 12 months.

The partners involved are Datuk Mohd Afrizan Husain, Tarmili Dulah Kusni and Khairul Azahar Ariffin.

In addition to the prohibition, the AOB imposed fines of RM455,000 on the firm, and RM88,000 each on Mohd Afrizan and Khairul Azahar respectively.

The SC said the audit firm and its partners were sanctioned for several breaches involving non-compliance with auditing standards on fundamental and basic audit procedures, which affected key financial statement line items including inventories, revenue, cost of goods sold and trade receivables.

XiDeLang shares closed half a sen or 5.56% lower at 8.5 sen yesterday, giving it a market capitalisation of RM153.42 million. The stock has fallen 32% over the past one year.