{"id":2600,"date":"2019-09-04T13:51:50","date_gmt":"2019-09-04T13:51:50","guid":{"rendered":"https:\/\/www.africa-press.com\/ghana\/?p=2600"},"modified":"2019-09-04T13:54:09","modified_gmt":"2019-09-04T13:54:09","slug":"collapsed-banks-why-the-4-auditing-firms-were-sanctioned","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned","title":{"rendered":"Collapsed banks: Why the 4 Auditing Firms were sanctioned"},"content":{"rendered":"<p><strong>Regulators of the accounting profession in the country, the Institute of Chartered Accountants, Ghana (ICAG), has fined four auditing firms a total of GH\u00a22.2 million for non-compliance with auditing standards.<\/strong><\/p>\n<p>Pannell Kerr Forster (PKF) Chartered Accountant, J. Mills Lamptey &amp; Co., Morrison &amp; Associates and Deloitte &amp; Touche were sanctioned for various infractions they committed while exercising due assurances on the financial position of six collapsed banks.<\/p>\n<p>In a statement signed by the President of the accounting profession\u2019s oversight body, Professor Kwame Adom-Frimpong, the ICAG said the firms were fined for infractions committed while auditing six indigenous banks that were closed by the Bank of Ghana (BoG) in 2017 and 2018.<\/p>\n<p>PKF was fined GH\u00a2550,000; J. Mills Lamptey &amp; Co., GH\u00a2150,000; Morrison &amp; Associates, GH\u00a2350,000, and Deloitte &amp;\u00a0Touche, GH\u00a21.15 million.<\/p>\n<p>The statement said the imposition of the fines followed the completion of an enquiry into the work of the auditors in the six banks.<\/p>\n<p>However, a fifth auditor, EY Chartered Accountants, was exonerated after the Disciplinary Committee of the ICAG found that it complied with relevant provisions in the International Standards of Auditing (ISA) while auditing the now defunct Sovereign Bank, it said.<\/p>\n<p>Historic fine<\/p>\n<p>The fine is the first of its kind by the accounting and auditing watchdog since its establishment in 1963.<\/p>\n<p>It brings to an end a fact-finding mission it started in August 2018 to determine the role of its members in the collapse of seven banks at the time.<\/p>\n<p>The ICAG said although the four firms had breached aspects of the ISA, hence the fines, it was convinced that the auditors\u2019 roles had nothing to do with the collapse of the banks.<\/p>\n<p>PKF Chartered Accountants<\/p>\n<p>For the specific breaches, the statement said PKF was fined for its work with Capital Bank, whose licence was withdrawn in August 2017.<\/p>\n<p>It said the firm did not obtain sufficient appropriate audit evidence about the appropriateness of management\u2019s use of the going concern assumption in the preparation of financial statements and to conclude whether there was a material uncertainty about the entity\u2019s ability to continue as a going concern.<\/p>\n<p>\u201cFor example, the firm (PKF) failed to assess the impact of the non-existent investments totalling GH\u00a2482 million and impaired loans of GH\u00a2423 million which had been ring-fenced to be written off within a period of five years on the financial statements and on the opinion.<\/p>\n<p>\u201cBoth amounts were fully impaired at the reporting date and should have been written off to profit and loss in full,\u201d it said.<\/p>\n<p>Deloitte &amp; Touche<\/p>\n<p>For Deloitte &amp; Touche, it said it was fined for the audit work done on uniBank, UT Bank and the Royal Bank, whose licences were withdrawn in August 2018.<\/p>\n<p>It said the firm wrongfully defined liquid assets to include placements with other banks.<\/p>\n<p>\u201cThis is inconsistent with the provisions in all the three banks\u2019 own accounting policy; IAS 7 and Section 2.12 (3(j)) of the Guide for Financial Publication for Banks and Bank of Ghana Licensed Financial Institutions (2016),\u201d it said.<\/p>\n<p>It further found that Deloitte &amp; Touche\u2019s audited accounts of the three banks \u201ccontained errors that suggested a weak quality control over-reporting\u201d.<\/p>\n<p>Morrison &amp; Associates<\/p>\n<p>Morrison &amp; Associates was fined for work done on the accounts of the BEIGE Bank, whose licence was also withdrawn in August 2018.<\/p>\n<p>The statement said the firm provided insufficient documentation of audit to back its work.<\/p>\n<p>\u201cThe bank\u2019s disclosure of related parties and their transactions in the financial statements was inadequate. For example, Beige Bank had placed about 35.7 per cent of its investments in a related party investment company (Beige Capital Assets Company), contrary to the BoG\u2019s regulatory requirement limit of 10 per cent. This was clearly conspicuous in the bank\u2019s investment portfolio but was not highlighted by the firm during the audit,\u201d it said.<\/p>\n<p>J. Mills Lamptey &amp; Co.<\/p>\n<p>J. Mills Lamptey &amp; Co. was fined for breaches committed while auditing the accounts of the Construction Bank, whose licence was withdrawn in August 2018.<\/p>\n<p>The statement said the firm failed to obtain sufficient appropriate audit evidence on bank balances before issuing the audit opinion.<\/p>\n<p>\u201cThe firm did not perform audit procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor&#8217;s report that may require adjustment of or disclosure in the financial statements had been identified. For example, on Wednesday, 21st February, 2018, the bank received GH\u00a234 million from a shareholder as consideration for shares. The treatment of this as a post-balance sheet adjusting event was incorrect and inconsistent with the basis of recognising stated capital in accordance with Section 66 of the Companies Act, 1963, (Act 179),\u201d it said.<\/p>\n<p>EY Chartered Accountants<\/p>\n<p>EY, which audited the accounts of Sovereign Bank, was found not to have committed any grievous breach in the course of its duty.<\/p>\n<p>It complied with all the relevant provisions in the ISA and regulatory requirements necessary for the audit of the bank.<\/p>\n<p>The Disciplinary Committee did not identify any significant issue that required disciplinary action against the firm for the audit work done for the year ended December 31, 2016.<\/p>\n<p>Fact-finding committee<\/p>\n<p>In August 2018 when the BoG revoked the licences of the seven banks for breaches against the Banks and Specialised Deposit-Taking Institutions Act 2016, Act 930, the ICAG said it was concerned by auditors\u2019 work relative to the development.<\/p>\n<p>Consequently, it said, its council decided to set up a fact-finding committee to review the audit files prepared by the various audit firms on the said banks to determine whether audit work done supported the opinions by the auditors.<\/p>\n<p>The committee was also to review the specific circumstance of each bank under receivership and determine whether or not there were sufficient grounds to initiate disciplinary action against the statutory auditors.<\/p>\n<p>The press statement said the fact-finding committee completed its work and presented its final report on April 12, 2019.<\/p>\n<p>\u201cSubsequently, the council, in accordance with Section 16 (2) of the Chartered Accountants Act, 1963 (Act 170), set up a Disciplinary Committee for the purpose of holding an inquiry into the conduct of auditors of the seven banks that were placed under receivership,\u201d it said.<\/p>\n<p>It said the committee granted hearing to the auditors of the banks placed under receivership and their representatives were given the opportunity to respond, both in writing and orally, to the infractions raised by the Disciplinary Committee.<\/p>\n<p>After the Disciplinary Committee\u2019s report was submitted, the statement said, the council approved the findings and recommendations on August 7, 2019.<\/p>\n<p>In announcing the revocation of the licences of the seven banks in August 2017 and August 2018, the Governor of the BoG, Dr Ernest Addison, said the affected banks had breached aspects of the BSDI Act, including falsifying their audited accounts.<\/p>\n<p>Audit opinions<\/p>\n<p>An auditor&#8217;s opinion is a certification that accompanies financial statements. It is based on an audit of the procedures and records used to produce the statements and delivers an opinion as to whether material misstatements exist in the financial statements.<\/p>\n<p>The audit opinion can be unqualified, also known as a clean opinion presumed to be free from material misstatements, or qualified, given when the financial statements have not followed Generally Accepted Accounting Principles (GAAP).<\/p>\n<p>The qualified opinion can, therefore, be adverse, indicating that the financial records are not in accordance to GAAP and are grossly misstated.<\/p>\n<p>In the event the auditor is unable to complete the audit report due to absence of financial records or insufficient cooperation from management, the auditor issues a disclaimer of opinion.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Regulators of the accounting profession in the country, the Institute of Chartered Accountants, Ghana (ICAG), has fined four auditing firms a total of GH\u00a22.2 million for non-compliance with auditing standards. Pannell Kerr Forster (PKF) Chartered Accountant, J. Mills Lamptey &amp; Co., Morrison &amp; Associates and Deloitte &amp; Touche were sanctioned for various infractions they committed [&hellip;]<\/p>\n","protected":false},"author":66,"featured_media":2601,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[1685,1684,1683,1686],"class_list":["post-2600","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-4-auditing-firms","tag-collapsed-banks","tag-institute-of-chartered-accountants-ghana-icag","tag-sanction"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.1 (Yoast SEO v27.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Collapsed banks: Why the 4 Auditing Firms were sanctioned - Ghana<\/title>\n<meta name=\"description\" content=\"Regulators of the accounting profession in the country, the Institute of Chartered Accountants, Ghana (ICAG), has fined four auditing firms a total of GH\u00a22.2 million for non-compliance with auditing standards.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Collapsed banks: Why the 4 Auditing Firms were sanctioned\" \/>\n<meta property=\"og:description\" content=\"Regulators of the accounting profession in the country, the Institute of Chartered Accountants, Ghana (ICAG), has fined four auditing firms a total of GH\u00a22.2 million for non-compliance with auditing standards.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\" \/>\n<meta property=\"og:site_name\" content=\"Ghana\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-04T13:51:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-04T13:54:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/ghana\/2019\/09\/753916031_787517-600x400.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"francis\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"francis\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\"},\"author\":{\"name\":\"francis\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/#\/schema\/person\/3687592f7713dc6c826cf5bbd0e55bca\"},\"headline\":\"Collapsed banks: Why the 4 Auditing Firms were sanctioned\",\"datePublished\":\"2019-09-04T13:51:50+00:00\",\"dateModified\":\"2019-09-04T13:54:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\"},\"wordCount\":1239,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/ghana\/2019\/09\/753916031_787517-600x400.jpg\",\"keywords\":[\"4 Auditing firms\",\"Collapsed banks\",\"Institute of Chartered Accountants Ghana (ICAG)\",\"sanction\"],\"articleSection\":[\"all news\",\"Economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\",\"url\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/collapsed-banks-why-the-4-auditing-firms-were-sanctioned\",\"name\":\"Collapsed banks: Why the 4 Auditing Firms were sanctioned - 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