Securities Commission Malaysia

06/12/2025 | Press release | Distributed by Public on 06/12/2025 03:08

AOB Suspends Chengco and Sanctions Auditors from Auditing

AOB Suspends Chengco and Sanctions Auditors from Auditing

Kuala Lumpur, 12 June 2025

The Securities Commission Malaysia's Audit Oversight Board (AOB) has suspended the registration of Chengco PLT (AF 0886) (CCO) for two years due to serious audit quality issues.

The AOB also imposed sanctions against five of CCO's audit partners who were the engagement partners and engagement quality control reviewers (ECQR) of three public interest entities (PIEs).

It suspended Hong Thuan Boon and Yap Peng Boon for two years. It also prohibited Tan Wae Leng, Kong Tung Sam and Ng Kee Siang from accepting as clients and auditing any PIEs or schedule funds for one year.

The sanctions followed the AOB's findings of multiple breaches in relation to CCO's failure to comply with the relevant requirements of the International Standards on Auditing (ISA) as adopted by the Malaysian Institute of Accountants (MIA) when auditing the three PIEs.

Further, the findings were in fundamental and key audit areas. These include failures to obtain sufficient audit evidence in areas such as bank borrowings, opening balances and prior year adjustments, use of going concern assumption, other payables and accruals, revenue, cost of sales, redeemable convertible preference shares and goodwill.

Recurring audit deficiencies were also found in the areas of property development costs and fixed deposits.

In addition, the EQCR failed to sufficiently review key audit documentation, particularly those relating to significant judgements and risk areas. This had an adverse effect on overall audit quality.

These findings were prevalent across the audit engagements inspected and some were recurring from the AOB's past inspection on CCO. Despite being previously sanctioned by the AOB in 2019, CCO failed to demonstrate an improvement in overall audit quality. Hong Thuan Boon and Yap Peng Boon were also previously sanctioned by the AOB in 2019.

CCO appealed to the SC against the AOB's enforcement action. The SC dismissed the appeal and affirmed the AOB's decision. The suspension took effect from 12 June 2025.

The affected partners did not appeal the AOB's enforcement action. Their suspensions and prohibitions were effective concurrently from 30 April 2025.
AUDIT OVERSIGHT BOARD
SECURITIES COMMISSION MALAYSIA
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