The Dubai Financial Services Authority (DFSA) has imposed fines of $1.5 million (AED5.5 million) on KPMG LLP and $500,000 (AED1.8 million) on Milind Navalkar a former KPMG LLP Audit Partner and DFSA registered Audit Principal.
Both KPMG LLP and Navalkar referred the DFSA’s decisions for review by the Financial Markets Tribunal (FMT). However, they have since withdrawn their FMT references and therefore will not contest the DFSA’s findings in its decisions, the authority said in a statement on Thursday.
The DFSA imposed a fine of $15,275,925 on Abraaj Capital Limited (ACLD) in July 2019 as they were the only entity authorised by the DFSA.
ACLD was also the only entity in the Abraaj Group audited by KPMG LLP.
“KPMG LLP’s practices and Mr Navalkar’s professional competence fell far below the standard expected, which allowed ACLD to conceal its practice of window dressing for many years, DFSA chief executive officer Ian Johnston said.
Johnston added: “This action underscores the important role auditors play, as corporate gatekeepers, in enhancing investor confidence and maintaining the DIFC’s reputation as a global financial services hub.”
While the fine imposed on KPMG LLP reflects that it was only responsible for the audit of ACLD, the other entities in the Abraaj Group were audited by other audit firms in the KPMG global network that operate outside of the DIFC, the statement said.
Navalkar, who was found guilty of the failures conducted by KPMG LLP, signed off “audit reports without ensuring adequate audit procedures had been performed to enable an opinion to be formed on whether ACLD’s financial statements represented a true and fair view of the condition and the state of affairs of the firm,” the statement said.
Navalkar also failed to ensure the audits of ACLD’s financial statements were conducted in accordance with accounting rules. He additionally failed to act with professional competence and due care, contrary to Principle 3 of the Principles for Audit Principals.
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