Auditors: No 1MDB accounts are true and fair

The accounts of scandal-ridden 1Malaysia Develop­ment Bhd (1MDB) cannot be relied on from the time of its inception following KPMG’s move to say its previous opinion on the state of the fund’s books could not be relied on.

(The Star) – KPMG, which signed off on three unqualified audit reports for 1MDB, has informed its board of directors that the financial statements audited did not reflect a true and fair view of the company.

The audit firm – one of the Big Four auditors in Malaysia – also called for all necessary steps to be taken by 1MDB to prevent further or future reliance on the audit reports it prepared for the financial years ending March 2010 to 2012.

In 2016, Deloitte also said its audit reports on 1MDB’s financial statements issued on March 28, 2014, and Nov 5, 2014, for the financial years ending 2013 and 2014 should no longer be relied upon.

“According to KPMG, they reach­ed the above decision after going through the recently declassified Auditor-General’s report on 1MDB and other relevant documents that were withheld from them by the previous management of the company.

“If the documents had been disclosed to the auditors, KPMG believed the information ‘would have materially impacted the financial statements and the relevant audit reports’.

“In addition, KPMG has advised us that 1MDB should notify the relevant authorities on the latest status of the audit reports,” the statement read.

In a separate statement by KPMG Malaysia, the firm said it was terminated on Dec 31, 2013, during its audit of the financial statements for the year ending March 2013 and did not have access to information related to 1MDB after that.

The firm also confirmed writing to 1MDB, saying it did so after considering the content of the declassified Auditor-General’s report.

“KPMG Malaysia has and continues to fully cooperate with all relevant authorities investigating matters associated with 1MDB.

“Given the ongoing investigations by the authorities, it would not be appropriate for us to comment further,” it said.

KPMG was appointed on Sept 15, 2010, as the auditor for 1MDB. It was the second Big Four auditor appointed by the scandal-plagued fund.

It was dismissed by 1MDB after a difference of opinion on the fair value of 1MDB’s investment in Bridge Global SPC through Brazen Sky Ltd.

KPMG decided to issue a qualified audit report for 1MDB’s 2013 financial statements, but was replaced by Deloitte before it could do so.

Ernst & Young was the first auditor when 1MDB was still known as Terengganu Investment Autho­rity.

It was appointed on March 25, 2009, and terminated on Sept 15, 2010, due to differences in opinions regarding valuation of investments.

Deloitte was the third Big Four firm appointed by 1MDB on the same day it terminated KPMG.

It resigned in July 2016 after the US Department of Justice filed complaints seeking to recover over US$1.7bil (RM6.8bil) in assets allegedly linked to 1MDB.

Referring to the suit, Deloitte also noted that its audit reports on 1MDB’s financial statements for the financial years ending March 31, 2013, and March 31, 2014, could no longer be relied upon because of information in the civil suit that was not available during those periods.

1MDB issued a similar statement on the matter.

Parker Randall, which refers to itself as an alternative to the Big Four, was appointed in January, six months after Deloitte’s resignation.

On May 23, Finance Minister Lim Guan Eng asked the last of the Big Four firms, Pricewaterhouse­Coo­pers, for a special position audit and review of 1MDB.

Yesterday, the company also announced the appointment of Datuk Asri Hamidon as its new chairman effective June 25, reported Bernama.

He is the deputy secretary-general overseeing government investment at the Treasury, the Fi­­nance Mi­­nis­­try said in a statement.

Additionally, 1MDB has formed a new executive committee with Datuk Mohammad Faiz Azmi, Datin Rashidah Mohd Sies and Datuk Wan Mohd Fadzmi Wan Othman as members, the statement said.

The exco is entrusted by the board of directors to manage the day-to-day running of the company, it added.