WEEKS after the Community-Based Environmental Protection and Enhancement Programme’s (CEPEP) board complained to a Joint Select Committee (JSC) that issues with an auditor caused its billion-dollar financial audit backlog, another state-run company raised a similar concern.
Chairman of the Estate Management and Business Development Company Ltd (EMBD) Shameer Mohammed on Wednesday said the auditing firm unexpectedly pulled its service, so audits for 2013-2022 are still due in 2023.
EMBD receives an annual subvention from the Ministry of Agriculture of approximately $40 million.
During a Public Accounts (Enterprises) Committee on financial accounts for 2015, Mohammed said the auditor did not act fairly, ethically, and appropriately. It's a similar complaint the Cepep board made before the same committee on March 2, when it said it was unable to retrieve documents from a private auditor after Cepep’s server crashed in 2015, during an audit of the 2009-2014 financial years.
In EMBD's case, the auditor suspended then withdrew its services before completing the audit.
“We got to the point where they were not prepared to produce anything...Looking at the timeline the company was misled by the auditor. Having recognised that and cognisant that we were not getting anywhere after so many years we acted prudent(ly) and we took a bold step to go with another firm.”
In a letter to EMBD on July 19, 2019, Mohammed said the auditor’s reason for withdrawal was its “due diligence had expired.”
Mohammed said the auditor’s conduct was unacceptable and it further violated terms and conditions and misled the organisation.
He gave a timeline of the auditor's services as of 2009.
The then board reappointed the auditing firm in 2009 after it successfully submitted 2007 and 2008 audits. Mohammed said the 2009 audited financial statement submitted by the firm, in 2011, lacked details on the government grants. The auditor promised to address this issue in its 2010 statements.
In 2014, the auditor was reappointed for the 2011-2012 audits. When a new board was appointed in 2015, there were five years of financial statements outstanding (2011-2015).
After a three-year delay, the auditor submitted the 2011-2012 audits.
Even after the issues, EMBD selected the auditor, following a tender in 2017, to clear the 2013-2015 financials. The auditor was selected as the preferred bidder because it offered a discounted fee of $450,000 from the $620,000 original price.
The auditor promised to have the audits done and submitted in ten weeks. But, Mohammed told the JSC, these are yet to be completed.
The auditor’s auditing procedures –some of which were never disclosed in the bid proposals– threatened the confidentiality of active matters before the court. Acting on legal advice, EMBD did not provide requested documents to the auditor to prevent any compromise of legal proceedings which arose under the previous board. But the board tried to provide alternative documents to trace the company’s spending to the auditor.
Despite wr
