KUALA LUMPUR, May 27 — Accounting firm Deloitte must explain why it agreed to audit 1 Malaysia Development Berhad’s (1MDB) books when one of its key staff is Datuk Seri Najib Razak's son, PKR's Rafizi Ramli said today.

Rafizi said issues of conflict of interest would arise since Nizar Najib is an executive director with Deloitte's financial advisory services (FAS).

“Deloitte should have been more careful, the issue of conflict of interest arises, or at the very least a perception of conflict of interest.

“They would have known who Nizar is. How did they agree to handle 1MDB's accounts?” he told Malay Mail Online.

Earlier today, DAP’s Tony Pua urged the Malaysian Institute of Accountants (MIA) to investigate  Deloitte for failing to report allegedly dubious transactions it may have unearthed when vetting 1MDB's accounts.

In his complaint to MIA, the Petaling Jaya Utara MP cited the International Standards on Auditing, which he pointed out stipulates that auditors must conduct their job with “professional skepticism”.

Pua added that Deloitte’s auditors “cannot claim ignorance” given the public interest on 1MDB.

With this, he said he hopes the accounting authority will conduct an investigation on the international accounting firm.

Pua had previously slammed Deloitte for not being thorough in their 1MDB audit, pointing out that they had reported that the strategic investment firm had sufficient liquidity to cover its cash flow needs the same month when 1MDB encountered cash flow problems.

He said 1MDB was forced to seek extensions to a RM2 billion loan initially due last November, and even needed to seek help from tycoon Tan Sri T. Ananda Krishnan to avoid becoming delinquent in February.

The episode had then prompted Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah to describe 1MDB as experiencing cash-flow problems.

Pua also told Deloitte that its audit of 1MDB was being cited by Putrajaya to dispel allegations of wrongdoing and abuse involving the firm, and that the auditing firm was at risk of having its reputation tainted and becoming the “butt of jokes in the financial circles”.

Already under investigation by the Auditor-General and the Public Accounts Committee, suspicions over 1MDB grew after the Finance Ministry confirmed that the US$1.103 billion (RM3.973 billion) the firm was supposed to have “redeemed” from the Cayman Islands was being held in the form of “units” instead of cash as it previously claimed.