1MDB’s auditor Deloitte to meet PAC today

(Malay Mail Online) – Officials from the auditing firm accused of covering up the alleged financial improprieties of troubled investment arm 1Malaysia Development Bhd (1MDB) will face Parliament’s Public Accounts Committee (PAC) for questioning today.

Accounting firm Deloitte will be one of the key witnesses in the parliamentary bipartisan panel’s probe into 1MDB’s financial dealings after it was accused of ommitting alleged dubious findings in its audit.

The firm is also now the subject of investigation by the Malaysian Institute of Accountants following a complaint lodged by PAC member and opposition MP Tony Pua.

“We are seeing Deloitte today,” Pua told Malay Mail Online when approached in Parliament.

In his complaint to MIA, the Petaling Jaya Utara MP cited the International Standards on Auditing, which he pointed out stipulates that auditors must conduct their job with “professional skepticism”.

“In the 1MDB case, maintaining a very substantial RM13.4 billion of assets whose value cannot be properly determined… with poor governance and financial controls certainly raises sufficient suspicion for the auditors to exercise professional skepticism throughout the audit,” he said.

Pua added that Deloitte’s auditors “cannot claim ignorance” given the public interest on 1MDB.

Pua had previously slammed Deloitte for not being thorough in their 1MDB audit, pointing out that they had reported that the strategic investment firm had sufficient liquidity to cover its cash flow needs the same month when 1MDB encountered cash flow problems.

He said 1MDB was forced to seek extensions to a RM2 billion loan initially due last November, and even needed to seek help from tycoon Tan Sri T. Ananda Krishnan to avoid becoming delinquent in February.

The episode had then prompted Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah to describe 1MDB as experiencing cash-flow problems.

Pua also told Deloitte that its audit of 1MDB was being cited by Putrajaya to dispel allegations of wrongdoing and abuse involving the firm, and that the auditing firm was at risk of having its reputation tainted and becoming the “butt of jokes in the financial circles”.

Already under investigation by the Auditor-General and the Public Accounts Committee, suspicions over 1MDB grew after the Finance Ministry confirmed that the US$1.103 billion (RM3.973 billion) the firm was supposed to have “redeemed” from the Cayman Islands was being held in the form of “units” instead of cash as it previously claimed.