Sleepness nights over lawyer's statement on auditors and the audited

Since Nov 25, after a well-known lawyer issued a statement with regard to the press statement by current auditor-general Madinah Mohamad on the alleged tampering of the 1MDB audit report,

The response I was hoping for was in particular to this sentence in the statement issued by the lawyer - “[...] auditors and the audited would ordinarily meet to discuss the draft report for clarification and to correct any inaccuracies”.

Insofar as my understanding is concerned, the management of any company is generally to provide the auditor with the following information:

- All records, documentation and other matters relevant to the preparation and presentation of the financial statements

- Any additional information the auditor may request from the management

- Unrestricted access to those within the organisation if the auditor determines it necessary to obtain audit evidence objectivity.

To form his opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error.

The auditor’s responsibility is to express an independent, objective opinion on the financial statements of a company. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements.

I am an independent director in several companies that are listed on Bursa Malaysia. I also sit as an audit committee member in these same companies.

I have always relied on and depend heavily on the independence of the auditors and specifically the audit committee to report to us on any material issues they may discover from their audit of the company's financials.

The statement by the lawyer saying that the company and the auditor ordinarily meet to discuss the draft report for clarification and specifically “to correct any inaccuracies” is indeed troubling for me. I have been having sleepless nights since that statement from this lawyer.

What assurance do I have, as a member of the audit committees in publicly-listed entities that the auditors in these companies that I am in, are truly independent and that their work in the past and for the future has never involved meeting with the companies for “correcting any inaccuracies” in the course of their audit?

The MIA and the AOB, both having oversight on their members, should make their positions known officially as the statement from this non-practising auditor has now created doubt not only in my mind but I believe in the minds of every board member who also sits on the audit committee of every listed entity on Bursa Malaysia.

I do hope both bodies will not take the easy way out to say they have to investigate and read the whole statement in its entirety before commenting.

I was hoping MIA and AOB would do better - but unfortunately, after a lapse of two weeks, both bodies have chosen to remain silent on this issue when the integrity of their members are being questioned. - Mkini