View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
September 5, 2019

Ghana watchdog hands out first-ever fines over audit failings

For the first time since it was established in 1963, Ghana’s accounting and auditing watchdog, the Institute of Chartered Accountants (ICAG) has sanctioned four auditing firms with fines totalling GHS 2.2m ($402,265). Pannell Kerr Forster (PKF) has been fined GHS 550,000; J. Mills Lamptey & Co., GHS 150,000; Morrison & Associates, GHS 350,000, and Deloitte & Touche, GHS 1.15 million.

ICAG says the fines were imposed for non-compliance with auditing standards and relate to six local banks shuttered by the Bank of Ghana (BoG) in 2017 and 2018. A statement by ICAG President Professor Kwame Adom-Frimpong said the fines followed the conclusion of an enquiry into the work of the auditors at the six banks.

A fifth audit firm, EY, was cleared by the enquiry which said the firm had complied with all the relevant provisions in the International Standards of Auditing (ISA) while auditing Sovereign Bank, adding that ‘the Disciplinary Committee did not identify any significant issues that requires disciplinary action’.

PKF was fined for its work with Capital Bank (licence withdrawn August 2017): “The firm did not obtain sufficient appropriate audit evidence about the appropriateness of management’s use of the going concern assumption in the preparation of financial statements and to conclude whether there was a material uncertainty about the entity’s ability to continue as a going concern. For example, the firm [PKF] failed to assess the impact of the non-existent investments totalling GHS 482m and impaired loans of GHS 423m which had been ring-fenced to be written off within a period of five years on the financial statements and on the opinion. Both amounts were fully impaired at the reporting date and should have been written off to profit and loss in full.”

Deloitte & Touche was fined for the audit work done on uniBank, UT Bank and the Royal Bank (licences withdrawn August 2018). The enquiry found incorrect definitions of cash and cash equivalents ‘inconsistent with the provisions in all the three banks’ 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)’. Other findings noted: “The financial statements of all the three banks audited by Deloitte contained errors that suggested a weak quality control over reporting.”

Morrison & Associates was fined for audit work done on Beige Bank (licence withdrawn August 2018): “…the firm’s documentation of audit evidence was not adequate… disclosure of related parties and their transactions in the financial statements were inadequate. For example, Beige Bank had placed about 35.7% of its investments in a related party investment company (Beige Capital Assets Company), contrary to Bank of Ghana’s regulatory requirement limit of 10%. This was clearly conspicuous in the bank’s investment portfolio but was not highlighted by the firm during the audit.”

J. Mills Lamptey & Co. was fined for breaches in the audit of Construction Bank (licence withdrawn August 2018): “…there was no evidence that the firm obtained sufficient appropriate audit evidence on bank balances prior to issuing the audit opinion… The firm did not perform audit procedures designed to obtain sufficient appropriate audit evidence that all events up to the date of the auditor's report that may require adjustment of or disclosure in the financial statements had been identified.”

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A roundup of the latest news and analysis, sent every Wednesday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to International Accounting Bulletin