Section 266. Powers and duties of auditors

(1) Every auditor of a company shall report to the members on the financial statements and on the company’s accounting and other records relating to those financial statements and if it is a holding company for which consolidated financial statements are prepared shall also report to the members on the consolidated financial statements, and the report shall be—

(a) in the case of a public company, laid before the company at its annual general meeting; or

(b) in the case of a private company—

(i) circulated to its members; or

(ii) laid before the company at a meeting of members.

(2) An auditor shall, in a report under this section, state—

(a) whether the financial statements and, if the company is a holding company for which consolidated financial statement are prepared, the consolidated financial statements are in his opinion properly drawn up—

(i) so as to give a true and fair view of the matters required by section 249 to be dealt with in the financial statement and, if there are consolidated financial statements, in the consolidated financial statements;

(ii) in accordance with this Act so as to give a true and fair view of the company’s affairs; and

(iii) in accordance with the applicable approved accounting standards, or in the case where financial statements are required to be prepared for or lodged with the authorities referred to in section 26D of the Financial Reporting Act 1997, such financial statements shall be made in accordance with the applicable approved accounting standards subject to any specifications, guidelines or regulations as may be issued by such authorities;

(b) if in his opinion the financial statements, and where applicable the consolidated financial statements, have not been drawn up in accordance with a particular applicable approved accounting standard—

(i) whether in his opinion the financial statements or consolidated financial statements, as the case may be, would, if drawn up in accordance with that approved accounting standard, have given a true and fair view of the matters required under section 249 to be dealt with in the financial statements or consolidated financial statements;

(ii) if in his opinion the financial statements or consolidated financial statements, as the case may be, would not, if so drawn up, have given a true and fair view of those matters, his reasons for holding that opinion;

(iii) if the directors have given the particulars of the quantified financial effect under section 244, his opinion concerning the particulars; and

(iv) in a case to which neither subparagraph (ii) nor (iii) applies, the particulars of the quantified financial effect on the financial statements or consolidated financial statements of the failure to so draw up the financial statements or consolidated financial statements, as the case may be;

(c) in the case of consolidated financial statements, the names of the subsidiaries, if any, of which he has not acted as auditor;

(d) any defect or irregularity in the financial statements or consolidated financial statements and any matter not set out in the financial statements or consolidated financial statements without regard to which a true and fair view of the matters dealt with by the financial statements or consolidated financial statements would not be obtained; and

(e) if he is not satisfied as to any matter referred to in paragraph (a), (b) or (c), his reasons for not being so satisfied.

(3) An auditor of a company shall have a duty to form an opinion to each of the following matters:

(a) whether he has obtained all the information and explanations that he required;

(b) whether proper accounting and other records, including registers, have been kept by the company as required by this Act;

(c) whether the returns received from branch offices of the company are adequate; and

(d) whether the procedures and methods used by a holding company or a subsidiary in arriving at the amount taken into any consolidated accounts were appropriate to the circumstances of the consolidation,

and the auditor shall state in his report the particulars of any deficiency, failure or shortcoming in respect of any matter referred to in this subsection.

(4) An auditor of a company has a right of access at all reasonable times to the accounting and other records, including registers of the company and is entitled to require from any officer of the company and any auditor of a related company such information and explanations as he desires for the purposes of audit.

(5) An auditor of a holding company for which consolidated financial statements are required—

(a) has a right of access at all reasonable times to the accounting and other records, including registers, of any subsidiary, if necessary; and

(b) is entitled to require from any officer or auditor of any subsidiary included in the consolidated financial statements, at the expense of the holding company, such information and explanations in relation to the affairs of such subsidiaries included in the consolidated financial statements.

(6) The auditor’s report shall be attached to or endorsed on the financial statements or consolidated financial statements and shall, if any member so requires, be read before the company in general meeting and shall be open for inspection by any member at any reasonable time.

(7) An auditor of a company or his agent authorized by him in writing is entitled to attend any general meeting of the company and to receive all notices of, and other communications relating to any general meeting which a member is entitled to receive, and to be heard at any general meeting which he attends on any part of the business of the meeting which concerns the auditor in his capacity as auditor.

(8) If an auditor, in the course of the performance of his duties as auditor of a company, is satisfied that—

(a) there has been a breach or non-observance of any of the provisions of this Act; and

(b) the circumstances are such that in his opinion the matter has not been or will not be adequately dealt with by comment in his report on the financial statements or consolidated financial statements or by bringing the matter to the notice of the directors of the company or, if the company is a subsidiary, of the directors of its holding company,

he shall forthwith report the matter in writing to the Registrar.

(9) In addition to subsection (8), if an auditor in the course of the performance of his duties as an auditor of a public company or a company controlled by a public company is of the opinion that a serious offence involving fraud or dishonesty is being or has been committed against the company or this Act by officers of the company, he shall forthwith report the matter in writing to the Registrar.

(10) No duty to which an auditor of a company may be subjected to shall be regarded as having been contravened by reason of his reporting the matter referred to in subsection (9) in good faith to the Registrar.

(11) For the purposes of subsection (9)—

(a) a company is presumed, unless the contrary is established, to be controlled by a public company if the public company is entitled to exercise or control the exercise of not less than twenty per centum of votes attached to the voting shares of the company; and

(b) “a serious offence involving fraud or dishonesty” means an offence that is punishable by imprisonment for a term that is not less than two years or the value of the assets derived or likely to be derived or any loss suffered by the company, member or debenture holder from the commission of such an offence exceeds two hundred and fifty thousand ringgit and includes offences under sections 591, 592, 593, 594 and 595.

(12) An officer of a corporation who refuses or fails without lawful excuse to allow an auditor of the corporation, or an auditor of a corporation who refuses or fails without lawful excuse to allow an auditor of its holding company—

(a) to have access to any accounting and other records, including registers of the corporation in his custody or control;

(b) to give any information or explanation as and when required under this section; or

(c) otherwise hinders, obstructs or delays an auditor in the performance of his duties or the exercise of his powers,

commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding three years or to a fine not exceeding five hundred thousand ringgit or to both.

(13) Any auditor who contravenes subsection (8) or (9) commits an offence and shall, on conviction, be liable to imprisonment to a term not exceeding five years or to a fine not exceeding three million ringgit or to both.