BrazilKPMG cops one-year ban from new auditing work in Oman
KPMG in Oman has been suspended by local regulators from taking on any new audit work for one year due to a finding of ‘professional negligence’.
Following an investigation into “major financial and accounting irregularities” at some local listed entities, Oman’s securities regulator the Capital Market Authority (CMA) has suspended Big Four professional services firm KPMG from taking on any further audit clients regulated by the CMA for the coming twelve months, including listed companies, securities firms and insurers. The penalty does not apply to current appointments.
In a widely reported statement, the CMA said it had imposed the sanction after the securities regulator had “established professional negligence on the part of some audit firms that warranted disciplinary measures against them in the interests of the investors and other stakeholders.” According to the reports, KPMG, which has had a near 45-year presence in the Sultanate, has the right to appeal against the penalty before an independent appellate authority.
In a statement sent to Arabian Business, KPMG said it was “cooperating with the CMA during the review of certain audits dated prior to 2015 and the firm is fully committed to cooperating with the CMA to resolve these matters.” The firm added: “Audit quality and compliance with professional standards is the highest priority in KPMG. The firm strongly believes that continuously improving audit quality is fundamental to meeting its responsibilities and maintaining public trust.”
The ruling marks a testing period for the Big Four firm both regionally and in various corners of the globe, with KMPG beset by a number of international scandals and regulatory actions. The firm has been heavily chastised in the UK for the quality of its audit work and subsequently fined, is still reeling from its involvement in the Gupta scandal in South Africa and the ongoing loss of high-profile clients, and is being probed by the Malaysian Institute of Accountants (MIA) for its work on the scandal-ridden 1MDB fund.
Closer to home, the UAE branch of Oman umbrella KPMG Lower Gulf has also been embroiled in the fall-out of the Abraaj collapse, after signing off on the embattled health fund’s books prior to fellow Big Four firm Deloitte’s finding of financial impropriety – prompting a review of its auditing standards by the UK branch of KPMG and further criticisms concerning the close apparent links in personnel between KPMG and Abraaj.
With KPMG the last to report financially among the Big Four, following recent record global revenues reported by its three bigger rivals, including a $43.2 billion haul from Deloitte and the $41.3 billion announced by PwC, it’s yet unclear the impact of the various spot-fires at the global level. Locally at least the firm appears to continue to be going strong, among other good news recently signing a MoU with the Saudi Ministry of Communications and Information Technology to establish a data analytics and artificial intelligence insights centre in Riyadh.
And the Omani regulator itself was quick to move beyond censure. “At the same time, CMA also wishes to sincerely acknowledge the positive contribution of the audit profession as a whole in Oman that ensures integrity of financial reporting being a critical pillar of investor protection and Corporate Governance,” the CMA said in its statement, adding that it expects the firms which have been subject to disciplinary measures to carry out comprehensive internal reviews.
