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Showing posts with label 1Malaysia Development Bhd (1MDB). Show all posts
Showing posts with label 1Malaysia Development Bhd (1MDB). Show all posts

Monday 28 September 2015

Urgent to tell the truth !


THE greatest tribute that Malaysians can pay to the memory of Kevin Morais and others like him who had sacrificed their lives fighting against the abuse of power is to protect and strengthen those institutions tasked with ensuring that integrity and good governance define our identity as a nation.

Each and every one of those institutions – from the Malaysian Anti-Corruption Commission (MACC) to Bank Negara – is under some sort of stress and strain today. Fulfilling their amanah (trust) – doing what they are required to do by law and convention – has become a major challenge. Why are they in such a situation today?

One, we continue to be burdened with a neo-feudal psychology which accords precedence to unquestioning loyalty to a leader, however wrong he may be, over allegiance to values, principles and institutions associated with integrity. The neo-feudal leader himself expects such blind loyalty and cultivates it assiduously through material rewards and allurements.

Two, in a society where communal consciousness is pervasive there is always a tendency among a significant segment of society to demonstrate fidelity to communal identities, institutions and personalities. Such fidelity often results in the subordination of values such as integrity and honesty.

Three, when loyalty to communal identity becomes obsessive, it is not difficult to whip up fear and hatred of the other to a point where collective fear overwhelms concern for integrity or righteousness. The manipulation of fear, by no means confined to ethnic and religious sentiments, is sometimes a tool that elites employ in order to perpetuate their power.

Four, when a party has been dominant for a long while – as the Barisan Nasional was until 2008 – and has not been held in check by a culture of accountability and transparency, it develops a mindset that is dismissive of anything that questions its exercise of power. Integrity is often the victim of such a mindset.

Five, a major episode in the life of a nation that devastates the integrity of a vital institution of governance can weaken the principle and practice of amanah in society as a whole for decades to come. This is what happened in Malaysia in 1988 when the head of the Judiciary was removed on flimsy, fabricated charges and senior judges dismissed.

For all these reasons, institutions which are expected to preserve and protect values and principles such as truth, justice, integrity and honesty have not been able to function as well as they should. The investigations into 1MDB and the RM2.6bil in the Prime Minister’s personal bank account which have been hampered and hindered by various moves and manoeuvres underscore this.

In more concrete terms, the PAC has been immobilised. There is still no action on the report submitted by Bank Negara to the Attorney-General which called for enforcement. There has been very little progress in apprehending key individuals wanted in both the 1MDB and RM2.6bil investigations.

The Prime Minister has yet to sue the Wall Street Journal for alleging financial improprieties on his part. Those who are concerned about integrity in public life are understandably disillusioned about the whole situation. This may explain why some of them may have sought external avenues to address the malaise.

There is no doubt at all that foreign actors who are focusing upon the current controversies in Malaysia have their own agendas. Given the orientation of the Wall Street Journal, the New York Times and the Washington Post, one is not surprised that they are exploiting the controversies to achieve their own goals which may include regime change in Putrajaya – a possibility which I had alluded to in an article on Feb 17.

Apart from Prime Minister Najib Razak’s explicit support for Hamas which has incensed Israel and its backers in the United States, it is also quite conceivable that Malaysia’s military cooperation with China reflected in the four-day joint naval exercise between the two nations in the strategic Straits of Malacca from Sept 18 – the biggest that China has conducted with any Asean state – has upset some circles in Washington DC.

It has also been argued that the targeting of Najib in the US media may be part of the attempt to ensure that Malaysia signs up to the Trans-Pacific Partnership (TPP) Agreement.

Whatever the motives, it is obvious that the Malaysian Government’s acts of commission and omission on 1MDB and the RM2.6bil account have provided foreign manipulators with a lot of ammunition to hit Najib.

This is why it is extremely urgent to tell the whole truth. The yet to be completed report of the Auditor-General which would be the basis for the reconstituted PAC to finish its work, and the finalisation of the MACC’s investigations, together with Bank Negara’s report which is with the Attorney-General, should reveal the truth about 1MDB and the RM2.6bil account. Foreign investigations may also help.

The Malaysian people should send a clear message to our Government. The investigations into the two related controversies should be closed and the whole truth should be made known to the nation and the world by the end of this year.

To allow the controversies to drag on into 2016 will only bring our nation to the edge of the precipice.

DR CHANDRA MUZAFFAR Kuala Lumpur

(Dr Chandra Muzaffar has been writing and speaking on integrity in public life since the nineteen seventies.)


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Thursday 4 June 2015

Regulators act on complaints: MIA to name and shame errant professionals

We have a due process to investigate any complaints made against any of our members,” MIA chief executive officer Ho Foong Moi (inset pic) told StarBiz.

PETALING JAYA: The auditors who signed off on the controversial 1Malaysia Development Bhd (1MDB) accounts will be investigated by the Malaysian Institute of Accountants (MIA).

Confirming this to StarBiz, MIA chief executive officer Ho Foong Moi said this was following complaints made by an Opposition Member of Parliament (MP).

DAP’s Petaling Jaya Utara MP Tony Pua had made two complaints to MIA, one in March and another in May.

“We have a due process to investigate any complaints made against any of our members,” Ho said.

MIA would not say when it aimed to complete the investigation. Ho said the deadline would depend on many factors as the case was complex.

“It also depends on whether we can obtain the relevant documents as well as prompt responses from the relevant parties,” she said.

On how impartial the probe would be, given that several council members of the MIA also work for three firms or the Accountant General’s office – who are involved with 1MDB – Ho said that any conflicted party would not be involved in the MIA investigation.

Three of the Big Four accounting firms were at one time or another working for 1MDB. The three are Ernst & Young, KPMG and Deloitte. The Accountant General’s Department is an authority under the Finance Ministry and advises the minister on who to appoint to the MIA council. Nine out of the MIA’s 29 council members work for the three firms or the Accountant General’s office.

The RM42bil debt chalked up by 1MDB has been the interest of many, but this is the first time the MIA is stepping in.

There have been previous calls for it to check on the auditors. The chairman of the Public Accounts Committee, which is holding an inquest into 1MDB, said he had found some accounting issues.

Datuk Nur Jazlan Mohamed said a few major accounting principles seemed to have been stretched to achieve the unqualified opinion in 1MDB’s 2014 accounts.

He called for regulators like the MIA and the Audit Oversight Board to step up and enforce the law. But the board has made it clear that it has control only over auditors of public listed companies.

The MIA, on the other hand, is a regulator for the accountants in Malaysia. The body has the power to investigate and punish members. It can even bar members from practising. But Ho stressed that the body can investigate only individuals, and not firms.

When the misconduct is less serious, the MIA can reprimand or fine the member. The MIA can also suspend a member for up to three years.

Move to name and shame errant auditors

PETALING JAYA: The regulator of audit firms in Malaysia has raised the issue of firms not fixing problems it had raised during inspections.

To put pressure on such firms, the Audit Oversight Board (AOB) will to make its inspection report public.

“We are concerned that audit firms may have started to be complacent with the deficiencies and issues raised in our inspection reports and have not given the required attention to the effectiveness of their remediation plans as indicated earlier to the board,” said executive chairman Nik Mohd Hasyudeen Yusoff in the AOB annual report 2014.

He noted that while firms have been enhancing their quality control, the board had found little actual improvement.

Last year, the board set stricter conditions for registration. It refused an application for recognition by a foreign audit firm because that firm failed to meet the board’s standards.

Also, the board acted against another firm for failing to meet critical measures on independence.

The board said new and revised standards next year would be a possible game changer to raise the quality of auditing and financial reporting in the country.

It was referring to the rules from the International Auditing and Assurance Standards Board that take effect on Dec 15, 2016.

Nik said these new standards would require auditors to put in key audit matter disclosures in their reports.

This would make the reports tailored to the clients rather than the mostly standard terms and boilerplates.

The board expects this to give more insights “of the risks surrounding a particular reporting entity and some of this may have market impact”.

The annual report said there was no major change in the number of registered and recognised audit firms and individual auditors.

Six major audit firms and four others audited 957 public-interest entities (PIE), covering 98.6% of the market capitalisation of public listed companies in Malaysia in 2014.

Last year, the AOB acted against a firm and two individual auditors.

It was the first time it had barred a firm from accepting any PIE as a client for 12 months. The firm also had to pay a penalty of RM30,000. In the past, the penalties were limited to a reprimand and the highest fine was RM10,000.

Regulator AOB expects and has mechanism to ensure audit firms strictly adhere to the laws

PETALING JAYA: The Audit Oversight Board (AOB), which has taken enforcement actions against two individual auditors and an audit firm last year, expects audit firms to adhere strictly to the laws.

“AOB has in place a robust enforcement mechanism with sufficient safeguards to ensure that fairness and justice will prevail,” it said.

From April 2010 to December 2013, eight auditors were sanctioned for failure to comply with the recognised auditing standards in the performance of their audit of the financial statements of public-interest entities (PIE) and failure to comply with the ethical and professional standards of the Malaysian Institute of Accountants by-laws.

In 2014, action was taken against two auditors and one audit firm.

AOB has prohibited Wong Weng Foo & Co from accepting PIE clients for 12 months. The audit firm was also imposed a penalty of RM30,000.

The AOB has also rapped two registered auditors, Lim Kok Beng of Ong Boon Bah & Co and Chan Kee Hwa of Khoo Wong & Chan, for non-compliance.

They were reprimanded for not complying with the International Standards on Auditing while auditing the financial statements of public interest entities.

In addition to the reprimand, a penalty of RM10,000 was imposed on Lim

Salaries of audit firm employees higher than fees



PETALING JAYA: For the first time in two years, growth in employee costs has outstripped audit fees among Malaysian firms.

While the growth in audit fees has dipped by a quarter from 12% to 9% in the past year, the growth in staff cost has remained constant for the past two years.

There has been higher headcounts in the past year, which rose by 6.6%, according to the Securities Commission’s Audit Oversight Board’s (AOB) annual report 2014. “Based on three years of analysis of the top 10 audit firms, salary costs continue to increase at a higher rate compared with the growth in the audit fees, which is a challenge for audit firms,” the board said.

Staff turnover was also another concern.

While the overall turnover has stabilised at about a quarter of the staff each year, the non-executives were leaving at a higher rate.

“This is a concern as turnover at this level may indicate the lack of attractiveness of audit as a career among younger accountants, which could be detrimental in the long term,” it said.

The report is compiled from 10 top audit firms, which collectively audited 957 public-interest entities (PIEs) covering 98.6% of the market capitalisation of public-listed companies in Malaysia.

The number of registered audit firms had decreased from 83 in 2010 to 52 last year.

The number of registered auditors has remained stable for the past five years. The number of registered auditors rose to 304 individuals in 2014 from 302 in 2013.

The annual report, AOB’s fifth, was released yesterday. AOB also questioned audit deficiencies for major firms. AOB inspects accounting firms regularly to promote and develop an effective audit oversight framework and promote confidence in the quality and reliability of audited financial statements in Malaysia.

Sources: The Star/Asia News Network

Related:

 Board reminds audit firms of their duties

 Who can review the 1MDB audits?

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