DFSA provisionally fines KPMG $2 million over Abraaj Group audit failings

KPMG and Navalkar dispute the findings and have applied for a review of the decisions, after which the DFSA's decision could be confirmed, varied or overturned



The DFSA said KPMG and Navalkar 'failed to follow applicable international auditing standards when performing audits of Abraaj Capital Limited for a number of years up to October 2017.
The DFSA said KPMG and Navalkar "failed to follow applicable international auditing standards when performing audits of Abraaj Capital Limited for a number of years up to October 2017.

By Reuters

Published: Mon 3 Oct 2022, 3:45 PM

Last updated: Mon 3 Oct 2022, 6:48 PM

Dubai's financial regulator said on Monday it has provisionally fined KPMG and its former audit principal $2 million over failings in the audit of collapsed private equity firm Abraaj Group.

The Dubai Financial Services Authority (DFSA) said it imposed a financial penalty of $1.5 million on KPMG and $500,000 on Milind Navalkar, who was a partner in the company at the time.

It also said KPMG and Navalkar dispute the DFSA's findings and have applied to the Financial Markets Tribunal for a review of the decisions, after which the DFSA's decision could be confirmed, varied or overturned.

Dubai-based Abraaj was the largest buyout fund in the Middle East and North Africa until it collapsed in 2018 after investors raised concerns about the management of its $1 billion healthcare fund.

The DFSA said KPMG and Navalkar "failed to follow applicable international auditing standards when performing audits of ACLD (Abraaj Capital Limited) for a number of years up to October 2017."

The DFSA said in its view, had KPMG performed its audit to the expected standard, it is likely that it would have identified that for more than five years, Abraaj's statements did not conform to accounting rules, it had failed to maintain adequate capital resources and was concealing the true state of its finances from its auditor.

KPMG did not immediately respond to a request for further comment. Reuters was unable to contact Navalkar. — Reuters


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