Deloitte should not have missed African Bank red flags, says auditing board
The Independent Regulatory Board for Auditors says the firm ignored warnings on an overestimation of cash flows
Deloitte ignored its own report that raised red flags about African Bank management’s aggressive cash-flow forecasts, the Independent Regulatory Board for Auditors (Irba) alleged on Monday. The regulatory body also said Deloitte did not address risks to African Bank’s ability to remain a going concern. Presenting evidence at the disciplinary committee looking into Deloitte’s audit of African Bank prior to its collapse in 2014, the regulator said African Bank’s forecasting model led to overestimation of cash flows by R510m in the 2013 financial year. Even though one of Deloitte’s technical partners, Pravin Burra, had constructed an estimation model that picked up this overestimation, Irba said Deloitte’s engagement partner for African Bank, Mgcinisihlalo Jordan, accepted the model used by the bank’s management as correct. Burra was brought in to help Deloitte’s partners responsible for African Bank with the impairment model. “There are at least three indicators in this document that ...
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