Abu Dhabi November 23 2022: KPMG has been blocked from winning new audit contracts in Abu Dhabi after regulators removed the Big Four firm from the list of accountants authorised to sign off companies’ financial statements, reported by Financial Times.
Financial Times further stated that the move by the Abu Dhabi Accountability Authority comes just weeks after a separate watchdog in Dubai fined KPMG and one of its former partners $2mn for failings in its auditing of Abraaj, the emerging markets private equity group that collapsed in 2018.
The ban will add to the challenges faced by Emilio Pera, the veteran partner elected on Friday as the new chief executive of KPMG Lower Gulf after months of turbulence at the business, which operates in the United Arab Emirates and Oman.
The appointment follows the resignation last month of chair and chief executive Nader Haffar after allegations of nepotism, cronyism and weak governance that have plagued the firm since summer.
The turmoil, which included a demand by some partners for KPMG International to suspend Haffar and the Lower Gulf board, raised questions over the consistency of standards across KPMG’s global network of locally owned businesses and the efficacy of the Big Four firm’s international bosses in policing those standards.
The ADAA did not publish the reasons for KPMG’s removal from its list of approved statutory auditors, which is updated every three months, and did not immediately respond to a request for comment. The ADAA monitors government entities and state-related companies to promote transparency.
KPMG Lower Gulf said its application to renew its licence to carry out statutory audits “was returned asking for more information” and that “the recent status change does not affect our current statutory audit engagements”.
“We are actively engaging with them to address all technical enquiries,” the firm said, adding that it was “committed to delivering the highest-quality audit service”.
Pera, who will take over on January 1, was elected after a vote by equity partners in the Lower Gulf firm. He beat competition from audit head Osama Harmouche and consultant Wejdi Harzallah.
The election was overseen by a KPMG committee and law firm Freshfields after accusations that a previous voting process to extend Haffar’s tenure until 2027 was a “sham”.
Pera will be tasked with responding to the recommendations of a governance review by Freshfields and reassuring the firm’s 3,400 clients in the region, including the Abu Dhabi National Oil Company and sovereign wealth fund Mubadala Investment Company, that the business will be stabilised.
Several partners left the firm after the unrest at KPMG Lower Gulf, with rivals trying to poach unhappy partners and staff.
Pera previously led the Lower Gulf audit division in the wake of the Abraaj scandal but was removed from the post at the start of this year before being appointed interim head of tax.
He said he was “deeply grateful” to Haffar and hoped to “build on his achievements”. “We continue to strive towards being the most trusted and trustworthy firm of choice for our clients.”
