KPMG and Deloitte signed 1MDB's books clean, then said the reports couldn't be relied on

1Malaysia Development Berhad accumulated RM42 billion (about S$14 billion) in debt between 2009 and 2014, and burned through four auditors in its first five years. Ernst & Young resigned in 2010 without signing anything; KPMG stepped in and signed unqualified opinions for the financial years ended March 2010, 2011 and 2012.

KPMG's exit was the tell: in 2013 it could not 'conclude' the accounts, reportedly because it could not fairly assess the value of assets behind the fund's US$2.3 billion placed with a Hong Kong-based asset manager. 1MDB bought a six-month extension, and Deloitte arrived in December 2013 and closed the books within the extension, signing unqualified opinions for 2013 and 2014 — valuing those investments at RM7.18 billion based on an assessment commissioned by the fund's own administrator.

Both firms later reversed themselves: KPMG reportedly told its board that the audited statements did not reflect a true and fair view, and Deloitte said in 2016 that the reports it issued in March and November 2014 should no longer be relied upon. The Malaysian Institute of Accountants, which regulates the profession, confirmed it was investigating complaints against both firms over the 2009–2014 sign-offs, with the probes at disciplinary committee level since mid-2016 and no verdict yet.

KPMG signed three clean opinions on a fund whose core assets it later admitted it could not fairly value — and whose 2013 accounts it could not conclude.

Deloitte took over mid-stream, closed the books inside a rushed extension, and valued disputed investments using an assessment hired by the client's own administrator.

Auditor musical chairs — four firms in five years, two resigning — is itself a red flag that neither successor treated as disqualifying.

Both firms ultimately disavowed their own work, which converted a judgment call into evidence that the original opinions should never have stood.

An unqualified opinion on assets you cannot value is not diligence, it is a rental: the auditor who signs under pressure inherits every lie in the accounts.

The MIA said the investigations' timing depended on its disciplinary committee, and no findings had been issued when the Straits Times reported in August 2018. The 1MDB scandal went on to engulf banks and Goldman Sachs separately.