Say No To Hudud

Wednesday, May 18, 2011

PwC Malaysia's legal nightmares to begin in August 2011

Chin Kwai Fatt and Datuk Seri Johan Raslan will be in the spotlight again, albeit for the wrong reasons.

STAY TUNED!

Tuesday, May 10, 2011

Can UMNO heed PAP's slips?

KUALA LUMPUR, May 9 — Umno secretary-general Datuk Seri Tengku Adnan Tengku Mansor said today his party will learn from the Singapore People’s Action Party’s (PAP) performance in the island republics  polls during the weekend.UMNO will heed PAP's slips, says sec-gen ~ themalaysianinsider.com

Datuk Seri Tengku Adnan Tengku Mansor must ensure that UMNO can do what is necessary to keep the faith of the people.
The results of the General Election in Singapore clearly show that the voters can longer be convinced by mere words, but that they expect the Government to truly represent the interests of the people. While the Singapore Government controlled by the PAP has done considerably well in running the economy and ensuring a sound investment climate for the country, the people still found reasons to shake things up a bit.

Can UMNO really learn from the PAP, and ensure that the people of Malaysia do not have too many reasons to swing to the other side?

In the questions that must be answered in Parliament, we had shown that the Malaysian Government has taken for granted the ability of the regulators to regulate themselves. This has allowed outsiders like PricewaterhouseCoopers Malaysia to exercise it's influence to such an extent in the operations of the regulators that investors, large and small, throughout the country, from Kangar to Kuching, are wondering if there is any chance at all that the Malaysian Government can put the trust back into the regulatory and corporate governance framework of the country.

Chin Kwai Fatt, the MD of PwC, exerts more influence on the regulators than they do on him
If the voters now add 'lack of faith' in the Governments Transformation Program, because it has become evident to them that at the end of the day, the corporate bigwigs like Chin Kwai Fatt and his fellows can get away with breaking any regulation or law that they please while still winning jobs from the Government, will they still come out in droves to vote for the BN come elections? Can UMNO afford to give any more ammunition to the opposition to shake the confidence of the people in their rule?

Now we have Datuk Seri Johan Raslan attending a summit in Istanbul, Turkey, while his firm gets away from answering the many questions they have been asked. To make matters worse, he has chosen to attend a summit that will be graced by the PM's wife, Datin Seri Rosmah Mansor. Will this not make the voters feel that the Government does not take fraud seriously?

Datuk Seri Johan Raslan, attending a summit in Istanbul, as if everything is fine in PwC
Voters fall into many groups that have different areas of concern when it comes to making their choice. While some areas of concern can be addressed with statements from the government, there are some areas where only action can convince the voters that they are making the right choice.

We sincerely hope that UMNO does not take the question of investor protection lightly, and ensure that the regulators can no longer fail in their tasks in a manner which causes more capital to flee the country, and more voters to flee the BN.


Sunday, May 8, 2011

PM Najib, these are the burning questions that must be answered in Parliament.

The PAP won 75.3 percent of the votes in 2001. In 2006, its share dropped to 66.6% of the votes. Now, the support for the PAP government stands at 60.1 percent of the voting population of Singapore. 


Singapore, which has a much higher standard of Corporate Governance and better climate of investor protection than Malaysia has seen a loss of more than 15% of the votes to the opposition. Can PM Najib allow Malaysian voters to be swayed away from the BN, because the government cannot even enforce its own regulations and laws?


Burning questions that need to be answered in Parliament

The Audit Oversight Board was established under Part IIIA of the Securities Commission Act 1993, which was incorporated into the Act via the Securities Commission Amendment Act 2010, which was passed by Parliament last year.

In the amendment, it is clear that the AOB comes into force on the 1st of April 2010, and its mission will be to assist the SC in overseeing the auditors of Public Interest Entities by registering the auditors and conducting inspections and monitoring programmes to assess the extent of the compliance of the registered auditors to recognised auditing and ethical standards.

1. In the reply given in Parliament on the 29th of April 2011, the AOB stated that it was able to register the firm of PricewaterhouseCoopers and one of its directors on the 1st of April 2010, as the AOB was proactive in making the registration simpler and was satisfied that the auditing firm of PricewaterhouseCoopers met the criteria for registration under Section 31P of the SCA.

a) As the members of the Audit Oversight Board were only appointed on the 1st of April 2010, who approved the simplification of the registration process for PricewaterhouseCoopers, and why was this privilege not extended to all auditing firms in the country? On what basis was this auditing firm picked for preferential treatment?

b) As the Senior Managers for the inspection and inquiry of auditors were only appointed in the end of March 2010, who was overseeing the inspection of PricewaterhouseCoopers under Section 31P of the SCA, and what was the position(s) held by this person(s) in the AOB or the SC to allow them to make the recommendation for registration?

2. As the Act clearly states that the application for registration must be accompanied by the fees and all relevant forms and documents, and the amendment to accept the fees was only signed into force on the 15th of April 2010.

a) Who made the decision on behalf of the Audit Oversight Board to accept a 'surat aku janji' from the firm of PricewaterhouseCoopers in lieu of the fees that they needed to pay?

b) Where in the Act is it spelled out that the AOB can accept a 'surat aku janji' as an official form of payment?

c) Why are there no auditors from the major auditing firms, namely Ernst & Young, KPMG, Deloitte KassimChan or PricewaterhouseCoopers who can produce a copy of the 'surat aku janji' or even remember that they had signed a 'surat aku janji' to the AOB? Is the 'surat aku janji' a lie that is being used to cover up more serious misconducts in the AOB?

3. The Director of the AOB is a former Director of the firm of PricewaterhouseCoopers who left the firm to join the AOB. This is not an acceptable practice according to accepted world-class regulatory standards, as it raises the possibility of conflict of interest.

a) The questions raised above clearly raise the specter that the AOB has been compromised by preferential practices, which defeat the reason for the AOB in the first place. Why have the board members of the AOB not addressed this serious breach of standards?

4. The Chairman of PricewaterhouseCoopers, Dato' Seri Johan Raslan was also appointed to the International Corporate Governance Consultative Committee by the Securities Commission

a) How was this appointment approved when Dato' Seri Johan Raslan uses the services of a 'tainted auditor', Roger Yue, Tan & Associates, whose engagement partner was charged by the SC for abetting a listed company in providing false information (inflated earnings) to Bursa Malaysia; as the auditor for a company in which he is a director and the majority shareholder?

b) As the firm of PricewaterhouseCoopers does many important consulting jobs for PEMANDU, the GLC's and many other PIE's, should the AOB be allowed to give this auditing firm preferential treatment, instead of ensuring that it is subject to the same oversight standards as the smaller auditing firms in the country?


Dato Seri Johan Raslan, the Executive Chairman of PricewaterhouseCoopers Malaysia. Why is he being given preferential treatment by the Securities Commission and the AOB? Should he not have stepped down from the International Corporate Governance Consultative Committee under the Securities Commission by now, as he is the majority shareholder and director in a company that still uses the services of a tainted auditor whose engagement partner has been charged by the SC for submitting false information to Bursa Malaysia?


Thursday, May 5, 2011

Will the 'aku janji' mess be a factor in GE 13

How PM Najib got unwittingly tangled up in the 'aku janji' mess in Parliament.


Singapore's PM Lee Hsien Loong apologizes to the people.
A Senator raised the question in Parliament about the questionable registration of PricewaterhouseCoopers by the Audit Oversight Board last week.


Questionable registration of the firm of PricewaterhouseCoopers

Questions:

a) how were the firm of PricewaterhouseCoopers and a director from its board, registered as auditors on the 1st of April 2010, by the Audit Oversight Board under Section 31s (1) of the Securities Commission Act, when most of the members of the Audit Oversight Board were themselves appointed after the 1st of April 2010: and

b) who approved and signed the letter of registration for the firm of PricewaterhouseCoopers and it's director? Was it the Chairman of the Securities Commission or the Director of the AOB? What mechanism was in place to accept and process the application when the Chairman of the Securities Commission only signed the amendment (sic) on the 8th of April 2010, and the Second Finance Minister signed it on the 13th of April  2010?

These questions were then sent to the Audit Oversight Board, for them to come up with a reply. What the AOB did then is not surprising, knowing the influence PwC has with the regulators in the country.

There was a discussion held with the powers that be in PricewaterhouseCoopers, to come up with a plausible explanation on how the firm was registered by the AOB on the 1st 0f April 2010, when the law only allowed the collection of fees for registration on the 15th of April 2010.

In Singapore we have a Prime Minister who has the humility to apologise to the people, but in Malaysia, the AOB under advice from PwC, decided that a simple apology saying 'sorry we screwed up' , would be too good for the people, so they decided to insult the intelligence of the Rakyat by coming up with the 'surat aku janji' alibi.

PM Najib had no part in this, but because of the 'brains' in PwC and the AOB, he has been unwittingly brought into the picture.
We have seen how Chin Kwai Fatt and his fellow senior partner in PwC, Khoo Chuan Keat had absolutely no problems in signing false declarations in the annual returns for their 'lets defraud our creditors company", PricewaterhouseCoopers Consulting Sdn Bhd. So the fact that the senior partners in PwC would have absolutely no qualms about getting the AOB to lie to the Malaysian people in Parliament should not come as a surprise to anyone.

But what should worry the government is this. When the people realise that an auditing firm, PwC Malaysia, has the influence to convince a regulator not only to register them without being put to the same stringent tests as the other auditing firms, but also to submit an answer in Parliament in the name of the Prime Minister, that was crafted purposely to lie to the people, so that they can continue with their 'business', one which places profits above rules and laws.

How will the government convince the people that it has not totally lost control over the regulatory framework of the country? 

Chin Kwai Fatt, the root cause of the 'aku janji' mess
When an auditing firm like PwC can get a lie, which is what the 'surat aku janji' is, to be used as a reply in the Malaysian Parliament, to save its own hide; is that not like a thief being allowed to pass judgment on himself in a court of law.

The litany of misconduct, lies and fraud perpetrated by Chin Kwai Fatt and his fellow senior partners in PwC has reached a pinnacle of sorts with this latest episode. Question is, should they be allowed to get away with it? Or will they finally be exposed as the crooks that they are, by a government that knows when enough is enough?

Wednesday, May 4, 2011

How PwC blatantly violated the law of the land

This is the account of how four senior partners from the auditing firm of PricewaterhouseCoopers blatantly violated the laws of the land.


The leader amongst the four senior partners who has brought disrepute not only to the firm of PricewaterhouseCoopers malaysia but also to the regulators is none other than Chin Kwai Fatt, the Managing Partner of PwC Malaysia.

Chin Kwai Fatt, MD of PwC Malaysia, who has not reported this blog to the Police or the MCMC. 
On the 1st of April 2010, the firm of PricewaterhouseCoopers was registered by the Audit Oversight Board on its very first day of operations.

Even though the AOB itself states that it will take an average of two weeks to complete the necessary checks and inspections before it can deem that an auditor fulfills the 'fit and proper' criteria, the fact that the Director of the AOB is a former PwC man, meant that no one questioned how the firm of PwC was registered on the 1st of April 2010.

What necessity was there for Chin Kwai Fatt, Datuk Seri Johan Raslan, Khoo Chuan Keat and Lee Tuck Heng to ensure that their firm was registered by the AOB without undergoing the necessary inspections? That they managed to get PwC registered on the first of April, even though the provisions for the AOB to collect the fees for registration was only made on the 15th of April 2010, makes it apparent that these four masterminds have absolutely no regard for the laws of the country.

When the questions were raised in the Malaysian Parliament, they had hoped to pull the wool over the eyes of the people by stating that the AOB accepted something called a 'surat aku janji' from PwC so that the registration could be fast tracked, despite the fact that the law states that the application must be accompanied by the required fees.

Chin Kwai Fatt, Datuk Seri Johan Raslan, Khoo Chuan Keat and Lee Tuck Heng, can you produce a certified copy of the 'surat aku janji' that you used to get your firm registered as auditors of PIE's without having to go through the necessary inspections by the AOB?

Khoo Chuan Keat, who signed a false declaration in 2009 for the annual returns for the firm of PricewaterhouseCoopers Consulting Sdn Bhd. Repeating the false declaration signed by Chin Kwai Fatt in 2008 for the same company. 
The fact that these four senior partners had been using a tainted auditor for the books of PricewaterhouseCoopers Consulting Sdn Bhd, should have served as a warning to any and all regulators that there is a need to have a closer look at things. But by getting their fellow partner appointed as the Director of the AOB, they have managed to escape scrutiny of the long running fraud they have been perpetrating on the creditors of PricewaterhouseCoopers Consulting Sdn Bhd.

But their need to keep the regulators from taking an interest in their past actions meant that they had to do everything necessary to ensure the 'mystique' that comes with the name PricewaterhouseCoopers was not the only thing that was preventing the regulators from knocking on their doors.

So they knocked on the doors of the regulators instead, and got their man in. But when they faced the prospect of the truth coming out in the Malaysian Parliament, they convinced the AOB to come up with the ludicrous reply that it accepted 'surat aku janji's' from PwC.

Even if they manage to convince the people that they had in fact used a 'surat aku janji' to get registered, it does not change the fact that the AOB had broken it's own provisions under the law in accepting the 'surat aku janji'.

The lengths to which these four senior partners have gone to hide their misconduct and fraud is beyond comprehension. The fact that they have also managed to drag in the regulators and the Malaysian Parliament into the mess they have created clearly shows that they are a threat to the efforts to improve the Corporate Governance framework in the country, and an affront to the auditing profession in general.


Monday, May 2, 2011

Was PM Najib misled in giving his reply in Parliament.

Perhaps the Malaysian taxpayers can now resort to giving 'surat aku janji' to the Income Tax Department in lieu of paying taxes in cash, as it seems that according the AOB and the SC, a letter of promise is as good as a cash payment as far as the Malaysian Government is concerned.



PM Najib was misleadingly caught up in the 'surat aku janji' mess
In his reply given in the Malaysian Parliament to the questions raised about the questionable registration of the firm of PricewaterhouseCoopers by the Audit Oversight Board (AOB) on the 1st of April 2010, PM Najib was misled into giving a reply which cannot stand up to scrutiny by those that prepared the text from the AOB.

The first part of the question asked how were the firm of PricewaterhouseCoopers and a director from its board, registered as auditors on the 1st of April 2010, by the Audit Oversight Board under Section 31s (1) of the Securities Commission Act, when most of the members of the Audit Oversight Board were themselves appointed after the 1st of April 2010?


In the reply prepared for PM Najib, it was stated that the AOB took a pro-active stance in registering the firm of PricewaterhouseCoopers and one of it's directors to facilitate the companies listed (sic) in hiring auditors, which is usually done in the second quarter as well as to help the companies eliminate unnecessary costs. 


The AOB came into existence on the 1st of April 2010, and the closing date for applications for the senior personnel who will be in charge of conducting the necessary investigations and inspections was just one month prior to that. The board members themselves were only appointed on the 1st of April 2010. Yet the AOB would like us to believe that they had the people necessary to do all the inspections under Section 31P of the SCA, and get the registration for PwC and it's director ready for approval on the very first day the Oversight Board members met each other. 


The reason given for the hasty registration is, not put too fine a point on it, a lie. This is because the initial explanation given by the AOB on the registration process, clearly stated that companies can go ahead with the audit firm they had picked in the AGM's prior to the 1st of April of 2010, and that the auditors can go ahead with their audits even though their registration under the AOB was pending. 


And nowhere in Section 31 of the SCA is it stated that the function of the AOB is to help corporations save money, instead their function is to 
(a) to promote and develop an effective and robust audit oversight framework in Malaysia;
(b) to promote confidence in the quality and reliability of audited financial statements in Malaysia; and
(c) to regulate auditors of public interest entities.

The AOB has definitely failed to promote confidence in the CG framework of the country by rubber-stamping the registration of PwC in such a manner and with such deplorable excuses on its very first day of operations.

Chin Kwai Fatt, the root cause for the AOB and 'surat aku janji' mess

The second part of the question raised in Parliament was who approved and signed the letter of registration for the firm of PricewaterhouseCoopers and it's director? Was it the Chairman of the Securities Commission or the Director of the AOB? What mechanism was in place to accept and process the application when the Chairman of the Securities Commission only signed the amendment (sic) on the 8th of April 2010, and the Second Finance Minister signed it on the 13th of April  2010?

In the reply prepared for PM Najib, the AOB did not answer the question and does not state who exactly approved the registration. Perhaps it is a mystery even to those that prepared the text of the reply.

Furthermore by stating that "the AOB has utilised the surat aku janji (letter of promise) from the audit firms for the purpose of payment of fees, so that the companies listed will not have any problems in hiring auditors while waiting for the law to come into force," the AOB has made a mockery of the very foundation of the auditing profession.

Is there any auditor in the world who will find a place for something as silly as a 'surat aku janji' in the financial statement that he prepares for his clients? How can the AOB so blatantly state that it accepts a letter of promise in lieu of payment when it clearly states under Section 31 of the SCA that the fees must be paid together with the application for registration.

"31O. Application for registration and renewal of registration as auditor of public interest entity
(1) An application for registration or renewal of registration as an auditor of a public interest entity for the purposes of this Act shall be made to the Audit Oversight Board.
(2) The application under subsection (1)—
(a) shall be made in the form as may be determined by the Audit Oversight Board; and
(b) shall be accompanied with—
(i) the fees as may be prescribed by the Commission; and"

Perhaps the Malaysian taxpayers can now resort to giving 'surat aku janji' to the Income Tax Department in lieu of paying taxes in cash, as it seems that according the AOB and the SC, a letter of promise is as good as a cash payment as far as the Malaysian Government is concerned.


Sunday, May 1, 2011

Audit Oversight Board Sleight of Hand - Part 2

Walaupun peraturan mengenai yuran AOB hanya berkuat kuasa pada 15 April 2010, namun begitu, pihak AOB telah mengguna pakai surat aku janji dari firma audit bagi urusan bayaran fi pendaftaran bagi mengelakkan syarikat-syarikat tersenarai menghadapi masalah melantik juruaudit sementara menunggu peraturan tersebut berkuat kuasa. Kelewatan menguatkuasakan peraturan ini adalah untuk memastikan peraturan yang dibuat dengan teratur dan sempurna.

Even though the law regarding the fees payable to the AOB only came into force on the 15th of April 2010, the AOB has utilised the surat aku janji (letter of promise) from the audit firms for the purpose of payment of fees, so that the companies listed will not have any problems in hiring auditors while waiting for the law to come into force. The delay in the enforcement of this rule was to ensure that the rule was made correctly and without blemish. ~ Reply given in the Malaysian Parliament to the questions raised regarding the questionable registration of PricewaterhouseCoopers by the AOB.

Nik Hasyudeen, Chairman of the AOB. We also accept surat aku janji's. 
En Nik Hasyudeen, there are many parts in the reply that the AOB and the Securities Commission has furnished as a reply  to the questions raised in the Malaysian Parliament regarding the questionable registration of the firm of PricewaterhouseCoopers under the Audit Oversight Board, which do not stand up to scrutiny. 

There are two parts to the question raised:

Questionable registration of the firm of PricewaterhouseCoopers

Questions:

a) how were the firm of PricewaterhouseCoopers and a director from its board, registered as auditors on the 1st of April 2010, by the Audit Oversight Board under Section 31s (1) of the Securities Commission Act, when most of the members of the Audit Oversight Board were themselves appointed after the 1st of April 2010: and

b) who approved and signed the letter of registration for the firm of PricewaterhouseCoopers and it's director? Was it the Chairman of the Securities Commission or the Director of the AOB? What mechanism was in place to accept and process the application when the Chairman of the Securities Commission only signed the amendment (sic) on the 8th of April 2010, and the Second Finance Minister signed it on the 13th of April  2010?

A little bird has told us that the answers were crafted by the AOB in the Securities Commission.

Our first question is simple. Where in Section 31P of the Securities Commission Act, or in any other Section 31 is there a provision for the Audit Oversight Board to accept a letter of promise from an auditor in lieu of the fees payable, to accept and process the applications?

We reproduce the entire Section 31 of the Securities Commission Act below, to assist the AOB in coming up with a reasonable explanation on how a surat aku janji is deemed as acceptable.

PART IIIA

AUDIT OVERSIGHT BOARD
DIVISION 1

Preliminary

31A. Interpretation for the purpose of Part IIIA
In this Part—
―auditor‖ means an individual auditor or audit firm who is registered under section 31O as an auditor of a public interest entity;
―Inspection Officer‖ means a person authorised by the Audit Oversight Board to carry out inspection under section 31V;
―Inquiry Officer‖ means a person authorised by the Audit Oversight Board to carry out inquiry under section 31W;
―Malaysian Institute of Accountants‖ means the Malaysian Institute of Accountants established under the Accountants Act 1967 [Act 94];
―public interest entity‖ means the entity specified in Schedule 1;
―relevant authorities‖ includes Bank Negara Malaysia, Companies Commission of Malaysia, Malaysian Institute of Accountants and any other authority as may be determined by the Minister.
[Ins. Act A1369:s.4]

DIVISION 2
Establishment and Functions of Audit Oversight Board

31B. Functions of Commission relating to audit oversight
The functions of the Commission relating to audit oversight shall be as follows:
(a) to promote and develop an effective and robust audit oversight framework in Malaysia;
(b) to promote confidence in the quality and reliability of audited financial statements in Malaysia; and
(c) to regulate auditors of public interest entities.
[Ins. Act A1369:s.4]

31C. Establishment of Audit Oversight Board
(1) For the purposes of discharging its functions under section 31B, the Commission shall establish an Audit Oversight Board.

(2) The Audit Oversight Board shall consist of the following members who shall be appointed by the Commission:
(a) an executive chairman; and
(b) six non-executive members.

(3) For the purposes of subsection (2), members who are appointed by the Commission—
(a) must possess knowledge and experience in finance, business, or in any other relevant discipline;
(b) must be individuals of integrity and reputation who have demonstrated commitment to the interests of investors; and
(c) must understand the responsibilities for and the nature of financial disclosures as required by public interest entities.

(4) The executive chairman shall serve on a full-time basis and shall not—
(a) be employed by any other person or be engaged in any other professional or business activity;
(b) be a director or controlling shareholder of any public interest entity, its related corporation or associate company;
(c) have any share in any of the profits of an accounting or auditing firm; and
(d) receive payment from any accounting or auditing firm or from any other person as may be specified by the Commission, other than fixed continuing payments under standard arrangements for retirement from an accounting or auditing firm subject to such conditions as the Commission may impose.

(5) In this section, ―controlling shareholder‖ means a person who—
(a) is entitled to exercise, or control the exercise of, not less than fifteen per centum of the votes attached to the voting shares in a company;
(b) has the power to appoint or cause to be appointed a majority of the directors of a company; or
(c) has the power to make or cause to be made, decisions in respect of the business or administration of a company, and to give effect to such decisions or cause them to be given effect to.

(6) At all times, not more than two non-executive members of the Audit Oversight Board shall be members of the Malaysian Institute of Accountants who are registered under the Accountants Act 1967 as a chartered accountant, a licensed accountant or an associate member.
[Ins. Act A1369:s.4]


31D. Application of Schedule 2
(1) Schedule 2 applies to members of the Audit Oversight Board.
(2) The Minister may amend Schedule 2 by order published in the Gazette.
[Ins. Act A1369:s.4]

31E. Responsibilities of Audit Oversight Board

(1) Without prejudice to the generality of section 31F, the responsibilities of the Audit Oversight Board in assisting the Commission in discharging its functions under section 31B, shall be as follows:
(a) to implement policies and programmes in ensuring an effective audit oversight system in Malaysia;
(b) to register auditors of public interest entities for the purposes of this Act;
(c) to direct the Malaysian Institute of Accountants to establish or adopt, or by way of both, the auditing and ethical standards to be applied by auditors;
(d) to conduct inspections and monitoring programmes on auditors to assess the degree of compliance of auditing and ethical standards;
(e) to conduct inquiries and impose appropriate sanctions against auditors who fail to comply with auditing and ethical standards;
(f) to cooperate with relevant authorities in formulating and implementing strategies for enhancing standards of financial disclosures of public interest entities;
(g) to liaise and cooperate with oversight bodies outside Malaysia to enhance the standing of the auditing profession in Malaysia and internationally; and
(h) to perform such other duties or functions as the Audit Oversight Board determines necessary or appropriate to promote high professional standards of auditors and to improve the quality of audit services provided by auditors.

(2) The Audit Oversight Board shall perform the responsibilities under subsection (1) on behalf and in the name of the Commission.
[Ins. Act A1369:s.4]

31F. Commission may give general or specific directions to Audit Oversight Board
The Commission may, from time to time, give the Audit Oversight Board such general or specific directions consistent with the provisions of this Part.
[Ins. Act A1369:s.4]

31G. Disclosure of interest

(1) A member of the Audit Oversight Board having directly or indirectly, by himself or a member of his family, any interest in any matter under discussion by the Audit Oversight Board shall disclose to such Board the fact and nature of his interest.
(2) A disclosure under subsection (1) shall be recorded in the minutes of the Audit Oversight Board and, after the disclosure, the member having an interest in the matter—
(a) shall not take part nor be present in any deliberation or decision of the Audit Oversight Board; and
(b) shall be disregarded for the purpose of constituting a quorum of the Audit Oversight Board.
(3) Any member of the Audit Oversight Board who fails to disclose his interest as provided under subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding five years or to both.
(4) No act or proceedings of the Audit Oversight Board shall be invalidated on the ground that any member of the Audit Oversight Board has contravened the provisions of this section.
[Ins. Act A1369:s.4]

DIVISION 3
Finance
31H. The Audit Oversight Board Fund
(1) For the purposes of this Part, the Commission shall establish and administer a fund to be known as the ―Audit Oversight Board Fund‖.
(2) The assets of the Audit Oversight Board Fund shall be the property of the Commission and shall be kept separate and apart from those of the Fund.
(3) The Audit Oversight Board Fund shall consist of the following:
(a) such sums as may be determined by the Commission from time to time for the purposes of this Part;
(b) contributions as may be prescribed by the Minister under section 31I;
(c) registration fees prescribed under section 31O;
(d) penalty imposed under section 31Z;
(e) fees or other charges imposed under this Part;
(f) monies earned or arising from any investment of the Audit Oversight Board Fund; and
(g) all other sums or property which may, in any manner, be payable to or be vested in the Audit Oversight Board Fund relating to any matter incidental to its functions and powers under this Part.
[Ins. Act A1369:s.4]

31I. Contribution
(1) The Minister may, by order published in the Gazette, prescribe the person who shall be required to make a contribution to the Audit Oversight Board Fund and the amount of such contribution.
(2) The contribution made under subsection (1) shall be utilised only for the purposes of carrying out the functions of the Commission under section 31B.
[Ins. Act A1369:s.4]

31J. Expenditure to be charged on Audit Oversight Board Fund
The Commission shall utilise the monies in the Audit Oversight Board Fund for the following purposes:
(a) paying any expenditure lawfully incurred by the Audit Oversight Board including legal fees and costs and other fees and costs, and the remuneration of persons employed or engaged by the Commission for the purposes of carrying out the functions of the Commission and the responsibility of the Audit Oversight Board in this Part, including the granting of loans, superannuation allowances and gratuities to such persons;
(b) paying any expenditure incurred in planning and implementing capacity building programmes relating to accounting and auditing profession; and
(c) paying any other expenses, costs or expenditure properly incurred or accepted by the Audit Oversight Board for carrying into effect the provisions of this Part.
[Ins. Act A1369:s.4]

31K. Investment
The monies of the Audit Oversight Board Fund shall, in so far as they are not required to be expended under this Part, be invested by the Commission in such manner as the Commission deems fit.
[Ins. Act A1369:s.4]

31L. Annual report and accounts
(1) The Audit Oversight Board shall, within three months after the end of each financial year, prepare a report on its activities during that financial year and send a copy of the report to the Commission.
(2) For the purposes of subsection (1), the report shall provide—
(a) the assessment of the Audit Oversight Board of its performance and effectiveness in discharging its responsibilities under section 31E;
(b) an assessment of significant risks relating to the quality and reliability of financial statements of public interest entities as identified by the Audit Oversight Board in the course of its inspection and inquiries, and key measures recommended by the Audit Oversight Board to address such risks;
(c) the systems, procedures and practices used by the Audit Oversight Board for evaluating the effectiveness of its operations; and
(d) any other matter affecting the carrying out of the functions of the Audit Oversight Board.
(3) The Commission shall cause a copy of the annual report to be submitted to the Minister.
(4) The Audit Oversight Board shall keep proper accounts of the Audit Oversight Board Fund and shall prepare a balance sheet in respect of such accounts.
(5) The accounts of the Audit Oversight Board Fund shall be kept separate from the accounts of the Commission as provided under section 29.
(6) The Commission shall cause the statement of accounts of the Audit Oversight Board Fund to be audited by auditors appointed by the Commission.
(7) The Commission shall, as soon as possible, send a copy of the statement of accounts of the Audit Oversight Board Fund certified by the auditors and a copy of the auditor’s report to the Minister who shall cause them to be laid before both Houses of Parliament.
[Ins. Act A1369:s.4]

31M. Statutory Bodies (Accounts and Annual Reports) Act 1980
The Statutory Bodies (Accounts and Annual Reports) Act 1980 [Act 240] shall not apply to the Audit Oversight Board.
[Ins. Act A1369:s.4]

DIVISION 4
Registration as Auditor of Public Interest Entity
31N. Requirement for registration as auditor of public interest entity
(1) No person shall, unless he is registered under this Division—
(a) hold himself out or act as an auditor of a public interest entity;
(b) knowingly consents to be appointed and knowingly acts as an auditor of a public interest entity; or
(c) prepare for or on behalf of a public interest entity any report required by the Companies Act 1965 to be prepared by an auditor.
(2) Any person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding five years or to both.
[Ins. Act A1369:s.4]

31O. Application for registration and renewal of registration as auditor of public interest entity
(1) An application for registration or renewal of registration as an auditor of a public interest entity for the purposes of this Act shall be made to the Audit Oversight Board.
(2) The application under subsection (1)—
(a) shall be made in the form as may be determined by the Audit Oversight Board; and
(b) shall be accompanied with—
(i) the fees as may be prescribed by the Commission; and
(ii) such information or documents as may be required by the Audit Oversight Board.
(3) Subject to section 31P, the Audit Oversight Board may approve or refuse the registration of an applicant or the renewal of registration of an auditor.
(4) The Audit Oversight Board may, upon the registration of an applicant or renewal of registration of an auditor, impose such conditions as it deems necessary or expedient and from time to time amend any such conditions or impose new or additional conditions.
(5) The Audit Oversight Board shall serve a written notice to the auditor concerned of the amendment of any conditions of the registration or renewal of registration, and such conditions as amended or such new or additional conditions shall take effect at the time the notice is served or at such time as specified in the notice, whichever is the later.
[Ins. Act A1369:s.4]

31P. Refusal to register or renew registration
(1) The Audit Oversight Board may refuse the registration of an applicant or the renewal of registration of an auditor if the Audit Oversight Board is satisfied that the applicantor the auditor—
(a) is not or has ceased to be an auditor approved under section 8 of the Companies Act 1965;
(b) has been convicted—
(i) within or outside Malaysia, of an offence involving fraud or other dishonesty;
(ii) of an offence under any written law relating to the protection of members of the public against financial loss due to—
(A) dishonesty, incompetence or malpractice by persons concerned in the provision of financial services or the management of companies; or
(B) the conduct of discharged or undischarged bankrupts;
(c) has engaged in any practices which reflect discredit on his ability to meet professional auditing standards;
(d) is an undischarged bankrupt within or outside Malaysia;
(e) is subject to a sanction imposed under section 31Z; or
(f) has failed to comply with any other requirements of this Part or any written notices or guidelines made under this Act.
(2) Where the Audit Oversight Board refuses the registration of an applicant or the renewal of registration of an auditor, the Audit Oversight Board shall serve a written notice on the applicant or the auditor stating that the registration or renewal of registration is refused and the grounds for such refusal.
(3) The Audit Oversight Board shall not refuse the registration of an applicant or the renewal of registration of an auditor without giving the applicant or the auditor an opportunity to be heard.
[Ins. Act A1369:s.4]

31Q. Power to revoke and suspend registration
(1) The Audit Oversight Board may, at any time, revoke or suspend the registration of an auditor if—
(a) there exists a ground on which the Audit Oversight Board may refuse an application under subsection 31P(1); or
(b) the auditor contravenes any terms or conditions imposed by the Audit Oversight Board in respect of his registration under this Part.
(2) The suspension under subsection (1) may be extended or revoked at any time by the Audit Oversight Board as it considers appropriate.
(3) Where the Audit Oversight Board intends to revoke or suspend the registration of an auditor, it shall serve a written notice to the auditor concerned stating that his registration is to be revoked or suspended and the grounds for such revocation or suspension.
(4) The Audit Oversight Board shall not revoke or suspend a registration under subsection (1) or (2) without giving the auditor an opportunity to be heard.
(5) For the purposes of this Part, an auditor whose registration has been revoked or suspended shall be deemed not to be registered from the date the revocation or suspension takes effect or any other date as may be specified by the Audit Oversight Board.
[Ins. Act A1369:s.4]

31R. Notification of refusal, revocation or suspension
Where an auditor falls within the scope of subsection 31P(1) or 31Q(1), he shall, immediately upon becoming aware of the happening of such event, notify the Audit Oversight Board in writing by setting out the relevant particulars.
[Ins. Act A1369:s.4]

31S. Period of registration
(1) The registration under subsection 31O(3) shall be for a period of twelve months from the date of its approval or from such date as may be specified by the Audit Oversight Board in writing.
(2) The registration of an auditor may be renewed for a further period of twelve months or such period as may be specified by the Audit Oversight Board from the date on which the renewal period would have expired.
[Ins. Act A1369:s.4]

31T. Register of auditors
(1) The Audit Oversight Board shall keep and maintain a Register of Auditors in such form and manner as it thinks fit.
(2) There shall be removed from the Register the name and other particulars of any auditor who ceases to be registered under this Part.
(3) Any person may, upon payment of the prescribed fees, inspect and take extracts from the Register kept and maintained under subsection (1).
[Ins. Act A1369:s.4]

DIVISION 5
Setting Auditing and Ethical Standards
31U. Auditing and ethical standards
(1) Subject to subsections (2) and (3), the Audit Oversight Board shall adopt the auditing and ethical standards to be complied by an auditor to the extent and in such manner it considers appropriate.
(2) For the purposes of setting auditing and ethical standards, the Audit Oversight Board may convene or authorise its staff to convene such advisory committees as may be appropriate, which may include accountants and other experts, as well as other stakeholders, to assist the Audit Oversight Board concerning the content of the auditing and ethical standards.
(3) The Audit Oversight Board may direct the Malaysian Institute of Accountants to establish or amend the auditing and ethical standards to be complied by an auditor.
[Ins. Act A1369:s.4]

DIVISION 6
Inspection and Inquiry
31V. Inspection
(1) The Audit Oversight Board shall, from time to time, conduct inspections to assess—
(a) the degree of compliance with the auditing and ethical standards by an auditor; and
(b) the quality of audit reports prepared by an auditor relating to the audited financial statements of public interest entities.
(2) The inspections under subsection (1) shall be carried out by any officers of the Audit Oversight Board or any person authorised by the Audit Oversight Board who is referred to as an ―Inspection Officer‖ in this Division.
(3) The auditor, its partners and employees shall cooperate with an Inspection Officer, conducting an inspection under this section, in the following matters:
(a) providing access to all books, accounts, working paper or other related documents;
(b) furnishing copies of or extracts from such books, accounts, working papers or other related documents; and
(c) providing information by oral interview, in writing or in any other manner as may be determined or required by an Inspection Officer.
(4) At the conclusion of the inspection made under this section, the Inspection Officer shall prepare a draft inspection report and a copy of that draft report shall be extended to the auditor concerned.
(5) The Audit Oversight Board shall forthwith discuss the findings of the inspection report with the auditor concerned and after taking into account the representations made by the auditor, the Inspection Officer shall finalise the draft inspection report.
(6) The auditor concerned shall, immediately, report to the Audit Oversight Board all remedial measures which have been or are being taken relating to any findings raised in the inspection report.
(7) The Audit Oversight Board may publish the inspection report referred to in subsection (5) if the auditor fails to take the relevant remedial measures under subsection (6).
[Ins. Act A1369:s.4]

31W. Inquiry
(1) If the Audit Oversight Board is satisfied, after conducting inspections under section 31V, that there is a reason to believe that any auditor—
(a) has contravened any provisions of this Part; or
(b) has breached or fails to comply with—
(i) any condition imposed under subsection 31o(4);
or
(ii) any written notice or guidelines issued by the Commission,
the Audit Oversight Board shall inquire into such matter.
(2) The inquiry under subsection (1) shall be carried out by any officers of the Audit Oversight Board or any person authorised by the Audit Oversight Board who is referred to as an ―Inquiry Officer‖ in this Division.
[Ins. Act A1369:s.4]

31X. Power to require information
(1) For the purposes of an inquiry, an Inquiry Officer may, by notice in writing served on a person, require such person—
(a) to provide all reasonable assistance in connection with the inquiry; and
(b) to appear before him or other Inquiry Officers concerned to be examined orally.
(2) Any statement made by any person under this section shall be reduced into writing by the Inquiry Officer, and signed by the person making it or affixed with his thumb print after such statement has been read to him and after he had been given an opportunity to make any correction he may wish.
(3) If the person referred to in subsection (2) refuses to sign or affix his thumb print on the statement, the Inquiry Officer shall endorse on the statement under his hand of such refusal and the reason thereof, if any.
(4) A person referred to in subsection (1) shall be legally bound—
(a) to give information relevant to the inquiry which is in his power to give;
(b) to answer all questions put to him by the Inquiry Officer; and
(c) to state the truth, whether or not the statement is made wholly or partly, in answer to questions.
(5) For the purposes of subsection (1), the Inquiry Officer examining the person may give directions on who may be present during the examination or during any part of it.
(6) Any statement made and recorded under this section shall be admissible as evidence in any proceeding in any court.
(7) Any person to whom a notice is issued under subsection (1) shall not—
(a) refuse to answer any question put to him by an Inquiry Officer as required under subsection (4) or neglects to give any information which may reasonably be required of him and which he has in his power to give; or
(b) knowingly furnish to an Inquiry Officer information or statement which is false or misleading in any material particular.
(8) For the purposes of this Division, any notice which is given shall, if practicable, be served personally on any person specified in such notice.
(9) Where any person specified in a notice given under this section or any other provisions of this Division cannot by the exercise of due diligence be found, the notice may be served by leaving a copy of it for him with some adult member of his family or with his servant residing with him.
(10) When any person specified in any notice given under this section or any other provision of this Division cannot by the exercise of due diligence be found, and service cannot be effected as directed by subsection (8), a copy of the notice shall be affixed to some conspicuous part of the house or such other place in which the person specified in the notice ordinarily resides, and in such case the notice shall be deemed to have been duly served.
[Ins. Act A1369:s.4]

31Y. Inspection and inquiry of consolidated financial statements
For the purposes of this Division and, in the case of consolidated financial statements of public interest entities, the powers conferred on the Audit Oversight Board and its officers, or persons authorised by the Audit Oversight Board to inspect or to inquire into such financial statements shall apply relating to the accounts, working papers and documents prepared by the auditors of the subsidiaries or associates of such public interest entities.
[Ins. Act A1369:s.4]

DIVISION 7
Sanctions
31Z. Sanctions
(1) Where any person contravenes or fails to comply with, observe, enforce or give effect to any of the following, that person has committed a breach:
(a) any provisions of this Part;
(b) any conditions imposed under subsection 31O(4); or
(c) any written notice or guidelines imposed or issued by the Commission.
(2) Where a person has committed a breach under subsection (1), the Audit Oversight Board may take one or more of the following actions:
(a) direct the person concerned to comply with the provisions of this Part or any conditions imposed under subsection 31O(4), or any written notice or guidelines issued by the Commission;
(b) reprimand the person concerned;
(c) require the person concerned to take such steps, as the Audit Oversight Board may direct, to remedy the breach;
(d) require relevant professional education to be undertaken by the person concerned;
(e) assign a reviewer to oversee an audit that is undertaken by the person concerned;
(f) prohibit the person concerned from accepting any public interest entity as its client for a period not exceeding twelve months;
(g) prohibit the person concerned from auditing financial statements of a public interest entity for a period not exceeding twelve months or permanently; and
(h) impose a penalty not exceeding five hundred thousand ringgit on the person concerned.
(3) Notwithstanding subsection (2), the Audit Oversight Board may require any person who has committed a breach under subsection (1) to give a written undertaking that such person shall comply with, observe, enforce or give effect to—
(a) the provision of this Part;
(b) any conditions imposed under subsection 31O(4); or
(c) any written notice or guidelines imposed or issued by the Commission.
(4) Subsection (3) shall not apply to any person who has committed a breach under subsection (1) and has been prohibited from auditing financial statements of a public interest entity permanently pursuant to paragraph 2(g).
(5) The Audit Oversight Board shall not take any action under subsection (2) without giving the person concerned an opportunity to be heard.
(6) Where the person concerned fails to pay the penalty imposed under paragraph (2)(h), such penalty may be sued for and recovered as a debt due to the Commission.
(7) Any monies obtained from the penalty imposed under paragraph (2)(h), shall be utilised to plan and implement capacity building programmes relating to the accounting and auditing profession.
(8) Where on an application by the Commission, it appears to the court that the person who has committed a breach under subsection (1) has failed to comply with any action taken by the Audit Oversight Board under subsection (2) or (3), the court may make an order directing such person to comply with such direction, requirement or terms of undertaking issued by the Audit Oversight Board.
(9) Nothing in this section shall preclude the Commission or any other relevant authorities from taking any other action which they may take under their respective written laws or by-laws.
[Ins. Act A1369:s.4]

DIVISION 8
General
31ZA. Power of Minister to amend Schedule
The Minister may, by order published in the Gazette, amend any of the Schedules in this Act.
[Ins. Act A1369:s.4]

31ZB. Appeal
(1) Any person who is aggrieved by the decision of the Audit Oversight Board under subsection 31P(1), section 31Q or subsection 31Z(2) may appeal in writing to the Commission within thirty days from the date on which such person is notified of the decision of the Audit Oversight Board.
(2) The Commission shall determine its own procedures in hearing an appeal under this Part.
(3) For the purposes of an appeal under this Part, the Commission may—
(a) affirm the determination of the Audit Oversight Board;
(b) set aside the determination of the Audit Oversight Board; or
(c) substitute for the determination of the Audit Oversight Board its own determination.
(4) The Commission shall decide on an appeal within a period of three months from the date the appeal is made.
(5) Where there is an appeal against the decision of the Audit Oversight Board under this section, the decision of the Audit Oversight Board under subsection 31P(1), section 31Q or subsection 31Z(2) shall not take effect until the appeal is disposed of.
[Ins. Act A1369:s.4]

31ZC. Duty to report to relevant authorities
Notwithstanding section 148, the Audit Oversight Board shall report to the relevant authorities if it becomes aware of any breach of any law or code of conduct which is administered by the relevant authorities.
[Ins. Act A1369:s.4]

31ZD. Cooperation and coordination
(1) For the purposes of promoting confidence in the quality and reliability of audited financial statements, the Commission may—
(a) enter into arrangements to cooperate with relevant authorities or relevant foreign authorities; and
(b) obtain any information or document from or share the same with any relevant authorities or relevant foreign authorities if the Commission considers it necessary to do so.
(2) In this section, ―relevant foreign authorities‖ means foreign authorities which exercise the functions corresponding to the Audit Oversight Board as referred to in section 31B.‖.
[Ins. Act A1369:s.4]

 (END OF SECTION 31)
PART IV
ISSUES OF SECURITIES AND TAKE-OVERS AND MERGERS DIVISION 1
PROPOSALS IN RELATION TO SECURITIES 

Audit Oversight Board Sleight of Hand Part 3 will follow.............