Dubai fines KPMG and partner over Abraaj audit failings
Regulator says $2m provisional penalty is for lapsed standards of audits that should have exposed dire state of private equity firm Abraaj’s finances
03 October 2022 - 17:19
byHadeel Al Sayegh
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Dubai — Dubai’s financial regulator said on Monday it has provisionally fined KPMG and its former audit principal $2m over failings in the audit of collapsed private equity firm Abraaj.
The Dubai Financial Services Authority (DFSA) said it imposed a financial penalty of $1.5m on KPMG and $500,000 on Milind Navalkar, who was a partner in the company at the time.
It also said KPMG and Navalkar dispute the DFSA’s findings and have applied to the Financial Markets Tribunal for a review of the decisions, after which the DFSA’s decision could be confirmed, varied or overturned.
Dubai-based Abraaj was the largest buyout fund in the Middle East and North Africa until it collapsed in 2018 after investors raised concerns about the management of its $1bn healthcare fund.
The DFSA said KPMG and Navalkar “failed to follow applicable international auditing standards when performing audits of ACLD (Abraaj Capital Limited) for a number of years up to October 2017“.
The DFSA said in its view, had KPMG performed its audit to the expected standard, it is likely that it would have identified that for more than five years Abraaj’s statements did not conform to accounting rules, that it had failed to maintain adequate capital resources and was concealing the true state of its finances from its auditor.
KPMG did not immediately respond to a request for further comment. Reuters was unable to contact Navalkar.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Dubai fines KPMG and partner over Abraaj audit failings
Regulator says $2m provisional penalty is for lapsed standards of audits that should have exposed dire state of private equity firm Abraaj’s finances
Dubai — Dubai’s financial regulator said on Monday it has provisionally fined KPMG and its former audit principal $2m over failings in the audit of collapsed private equity firm Abraaj.
The Dubai Financial Services Authority (DFSA) said it imposed a financial penalty of $1.5m on KPMG and $500,000 on Milind Navalkar, who was a partner in the company at the time.
It also said KPMG and Navalkar dispute the DFSA’s findings and have applied to the Financial Markets Tribunal for a review of the decisions, after which the DFSA’s decision could be confirmed, varied or overturned.
Dubai-based Abraaj was the largest buyout fund in the Middle East and North Africa until it collapsed in 2018 after investors raised concerns about the management of its $1bn healthcare fund.
The DFSA said KPMG and Navalkar “failed to follow applicable international auditing standards when performing audits of ACLD (Abraaj Capital Limited) for a number of years up to October 2017“.
The DFSA said in its view, had KPMG performed its audit to the expected standard, it is likely that it would have identified that for more than five years Abraaj’s statements did not conform to accounting rules, that it had failed to maintain adequate capital resources and was concealing the true state of its finances from its auditor.
KPMG did not immediately respond to a request for further comment. Reuters was unable to contact Navalkar.
Reuters
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