KPMG is among the big four firms alongside PWC, Deloitte and EY. KPMG is responsible for the documents, employees’ conduct, and misleading information. The British auditing regulator FRC confirmed to the London tribunal that KPMG is admitted with a fine of around 14.4 million. The Dubai financial services authority also confirmed that the audit firm is imposed with a fine of $1.5 million. The partner of the firm, Milind Navalkar also charged an amount of $500,000. To review the decision, the audit firm contacted the financial markets tribunal. The inspection of the financial market will confirm or overturn the audit process of KPMG. The blog sheds light on this latest news. The purpose of talking about the latest news is to bring out the changes happening around the globe. Till the 2017 year, Abraaj Capital Limited was audited by KPMG. DFSA blame international audit standards are not followed by KPMG. DFSA penned down the reason for the audit failure as the client Abraaj does not conform to the accounting rules, maintenance of adequate capital resources, and conceals the picture from its auditor.
The Dubai Financial services authority:
DFSA is the regulatory body that works for the special economic zone. ACLD {Abraaj Capital limited} did not submit the material transactions that happened with other Abraaj entities. In 2019, ACLD was fined by DFSA for unauthorised activities from the parent concern Abraaj investment management limited. DIFC is responsible for operational management, strategic development, and planning of the international financial centre. It also takes care of the regulations that operate other than financial services. ACLD was the entity of Abraaj audited by DFSA. The other entities are operated by the KPG global network that works outside of DIFC. The decision notices on the DFSA website posted the details of DFSA’s action against the allegations. DFSA is waiting for the FMT review of the auditor. KPMG LLP handled ACLD the partial entity of Abraaj. The other entities of the Abraaj group were audited by the KPMG global network. KPMG LLC is under the control of DIFC. KPMG’s global network is outside the country and not under the control of DIFC. KPMG LLP and Mr Naalkar deny the allegations led by the regulatory authority.
What is the difference between KPMG global and KPMG LLC?
KPMG global is an audit firm that works for global countries. Irrespective of the time-bound, they work round the clock. They work for different types of clients. They get exposed to the UK/US and European countries with training and secondments. KPMG LLC work with country specifications for the local network. It works for domestic clients. Professional qualifications are given high value at KPMG global services. The nature of the job is a desk job. The growth rate is comparatively high at the international firm than LLC firm. The reason is the number of projects and profits.
Abraaj Group:
Arif Naqvi, the Pakistani Abraaj group, established the Abraaj group. The main operations of the firm were in Dubai, United Arab Emirates. The firm started its business in the year 2002 with US$3 million. The firm raised funds to invest in North Africa. In the year 2016, the firm invested in Turkey. Abraaj Group was known for its global investments. It has dealings with more than 200 investments. Ashish Dave, the chief financial officer of Abraaj group was fined $1.7 million for misleading conduct. The two units of Abraaj were under liquidation in the year 2021. The finance professionals from these units have filed a lawsuit against KPMG for the damages. In 2021, the case was adjourned by the Judge Phillippa Whipple of the UK high court.
The financial markets tribunal:
The financial markets tribunal hears the regulatory proceedings and references issued by the FSA. It is created in the year 2004 with regulatory law. The tribunal reviews the decisions taken for the penalties, authorisations, disciplinary measures, FSA decisions, and functionalities. The financial markets tribunal, Dubai, is the authority to review the cases.
Group audit review:
During group audit review, the auditors understand the areas related to regulations, external factors, internal factors, industry type, strategies, objectives, review and internal controls. The audit process consists of four steps survey, fieldwork, audit and review of follow-up processes. The auditor working with the parent company is responsible for the supervision, direction and performance of the group audit. The group audit is based on the consolidated financial reports.
Corporate crimes from the web of economic and financial dependencies:
• In 2016, Deloitte was involved in the unified health infrastructure project. The company launched the project without the backup eligibility verification for the food stamp program. This process created the problem. Deloitte agreed to pay a fine of $50 million.
• In Oman, the Capital market authority declared that there are irregularities and negligence from KPMG.
• EY was sued for the internal control of forest oil corp. EY is the audit partner of Forest oil corp. PCOAB, US inspected and declared that the internal control was not effective.
• In early 2017, PWC was reported for the accounting scandal of British Phone Company, an Italian unit. The CEO and CFO had inflated the revenues and disguised the picture of the financial performance.
• The Securities and Exchange Commission restrict having bank accounts with clients. Deloitte Japan was fined $ 2 million for having bank accounts with a subsidiary of a bank client. The employees at Deloitte operated the bank accounts that formed the ground for the issue.
Conclusion:
Auditing services are not rendering growth opportunities and profit-making goals. The big four firms are making profits from consultation services and government offers. The separation of services improves the quality of work and revenue volumes.
