KUALA LUMPUR (Aug 11): The High Court has set aside sanctions imposed on audit firm Afrizan Tarmili Khairul Azhar (AFTAAS) by the Securities Commission Malaysia's (SC) Audit Oversight Board (AOB) for alleged non-compliance with auditing standards. The AOB had also prohibited AFTAAS and its partners from accepting new clients since Nov 25 last year.

Yesterday, High Court Justice Datuk Seri Mariana Yahya allowed the firm along with its partners Datuk Mohd Afrizan Husain, Tamili Dulah Kusni, Khairul Azahar Ariffin judicial review application against the SC's decision to sanction the firm.

In addition, Justice Mariana ordered the commission to pay RM15,000 costs to the accounting firm and directed that damages be assessed by the court.

Besides seeking to quash the SC decision in its judicial review application, the firm and three partners are also seeking a stay of all steps, acts and things done by the AOB and the SC under Part Part IIIA of the Securities Commission Malaysia Act 1993 against them until the final determination of its application.

They are also seeking a declaration that all steps, acts and things done by the AOB and the SC against them in furtherance to Findings in the Final Inspection Report dated May 31, 2019 under its powers in Part IIIA of the Securities Commission Malaysia Act 1993 are ultra vires, wrongful, null and void.

Yesterday's decision was confirmed by the firm's counsel David Matthews to theedgemarkets.com who appeared together with Sukhvinder Singh.

On Nov 25, the SC announced that AOB had prohibited the audit firm and its partners from accepting clients and auditing public interest entities or scheduled funds, for 12 months.

The partners involved are Mohd Afrizan, Tarmili and Khairul Azahar. In addition to the prohibition, the AOB imposed fines of RM455,000 on the firm, and RM88,000 each on Mohd Afrizan and Khairul Azahar respectively.

However, it is understood that they got a stay on paying the fine until the disposal of the judicial review.

The SC said the audit firm and its partners were sanctioned for several breaches involving non-compliance with auditing standards on fundamental and basic audit procedures, which affected key financial statement line items including inventories, revenue, cost of goods sold and trade receivables.

It was reported in theedgemarkets.com that several firms XiDeLang Holdings Ltd and Zelan Bhd announced last December that AFTAAS had to resign from doing an audit on those two companies as a result of the sanctions.

Meanwhile, it is understood that the SC have applied for a stay of yesterday's decision pending its proposed appeal to the Court of Appeal.