Abu Dhabi – Mubasher: Dubai courts ordered KPMG Lower Gulf to pay $231 million, equivalent to 848 million dirhams, to a group of investors who reported losing money due to the company’s poor quality audit of a fund they invested in, according to a report by the Financial Times.
The ruling, issued in late March, found that the auditing firm – one of the 4 largest auditing firms in the world – had violated international auditing standards by approving the financial statements of the infrastructure fund managed by the collapsed private equity firm, the Abraaj Group, according to Bloomberg Al Sharq.
This ruling is considered the largest ever against an accounting firm, and its value exceeds the company’s revenues of $210 million by about 770 million dirhams in its last fiscal year, according to the report.
In the text of the court ruling, it stated that it had concluded from the papers, documents and report of the appointed committee of experts that it was confident that the auditing company had committed many violations when it audited the financial statements of the investment fund.
KPMG Lower Gulf said it believed it had strong grounds to appeal and had referred the case to the Court of Cassation. It did not say whether it would cover the obligation payment by insurance, or if its international network would step in to help.
KPMG’s Lower Gulf operations were already under scrutiny after allegations of nepotism led to the resignation of its former chairman last October.
The ruling highlights the costs and audits facing the “Big Four” accounting firms, which also include Deloitte, EY and PwC, after a series of scandals related to client audit work.
In February, KPMG in the United Kingdom settled a £1.3 billion claim by liquidators related to the audit work of the collapsed government contractor Carillion for an undisclosed amount.
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