State investor 1MDB's annual reports for three financial years ending March 2010 March 2011 and March 2012 that were audited by KPMG do not provide a true and fair assessment of the company's accounts.

This was confirmed in a letter the 1MDB board of directors received from KPMG on June 8 this year, the board said in a statement this morning.

"In the letter, KPMG advised us that 1MDB 'should immediately take all necessary steps to prevent any further or future reliance' on the three audit reports for the financial years ending March 2010, 2011 and 2012," the board said.

"According to KPMG, they reached the above decision after going through the recently declassified Auditor-General’s Report on 1MDB and other relevant documents that were withheld from them by the previous management of the company.

"If the documents had been disclosed to the auditors, KPMG believed the information 'would have materially impacted the financial statements and the relevant audit reports'," the board added.

Given the latest developments, the 1MDB board said it has also been advised by KPMG to notify the relevant authorities on the latest status of the Audit Reports.

The parliamentary Public Accounts Committee had, in 2016, revealed that KPMG, as well as audit firm Ernst and Young, had been replaced after the companies insisted on seeing documents on some of 1MDB's dealings.

In particular, the PAC report said KPMG had already decided to issue a qualified audit report for 1MDB's 2013 financial report, but the audit firm was suddenly replaced by Deloitte.

The qualified opinion refers to a statement issued by KPMG that suggested the provision of insufficient information, meaning that the company in question has not maintained appropriate accounting standards.

1MDB has not furnished its annual report for 2015, 2016 and 2017, on grounds that the police were in possession of key documents which were seized during a raid in July 2015.

Finance Minister Lim Guan Eng had last month instructed that PricewaterhouseCoopers (PWC) be appointed as 1MDB's new auditor to determine the state-owned company's current financial standing.