The four auditing companies were
Deloitte & Touche, PKF Chartered Accountants, J. Mills Lamptey & Co.
and Morrison & Associates.
The firms were fined a total of
GH2.2 million for their various malpractices.
Among the four was Deloitte and
Touche, a leading accounting firm which is a prestigious member of the Big 4
accounting firms which is made of KPMG, EY, PwC.
Deloitte and Touche received the
biggest fine with GH1.15 million slapped on them for their involvement with
Unibank, UTBank and Royal Bank.
Explaining the infractions committed
by the firm, the ICAG in its statement said: the definition of cash & cash
equivalents in the financial statements of all the three banks audited by the
firm include, among others, "liquid assets with maturities of less than three
However, the cash and cash
equivalents in the cash flow statement in all the three (3) banks included "Placements with other banks" with maturities of more than three months.
This is inconsistent with the
provisions in all the three bank's own accounting policy; IAS 7 and Section
2.12(3(j)) of Guide for Financial Publication for Banks and Bank of Ghana
Licensed Financial Institutions (2016).
Also, the deferred tax assets of
GH9,563,313 was recognized in the Royal Bank's Financial Statements. However,
there was no documentary evidence in the working papers that the recognition
was done in accordance with the provisions of IAS 12 (revised).
Again, financial statements of all
the three banks audited by Deloitte contained errors that suggested a weak
quality control over-reporting.
The following are
examples of significant errors:
a) A review of UT Bank's
financial statements for the year ended 31st December 2014 indicated that an
amount on the face of the statement of financial position for total liabilities
is GH1,489,991 whiles the amount in the notes was GH1,513,377.
Additionally, the comparative
amounts on the face of the statement of profit or loss for interest expenses,
net interest expense, fees, and commission income, taxation did not agree to
the amounts in the notes.
b) A review of The Royal Bank's
financial statements for the year ended 31st December 2016 indicates that the
comparative for other expenses figure on the face of the statement of profit or
loss was GH30,446,862, whiles the amount in the note was GH73,430,364.
In addition to the above, the
comparative for deferred income figure on the face of the statement of
financial position was GHÂ¢605,434 whiles the amount in the note was GHÂ¢605,437.
Consequently, the Council of ICAG
therefore, approved the recommendations of the Disciplinary Committee, and
sanctioned Deloitte & Touche and its Engagement Partners with a fine of
GH1.15 million with respect to the audit of UniBank's Financial Statements for
the year ended 31st December, 2016, UT Bank's Financial Statements for the year
ended 31st December, 2014, and The Royal Bank's Financial Statements for the
year ended 31st December, 2016.
Last year, Bank of Ghana
(BoG) announced the formation of Consolidated Bank Ghana Limited (CBG) to take
over the good assets and the operations of Five (5) local Banks that were
placed under receivership by Bank of Ghana.
In August 2017, Bank of Ghana
approved GCB Bank Limited's acquisition of the good assets of UT Bank and
Capital Bank, through a Purchase and Assumption Agreement.
The Council of the Institute of
Chartered Accountants (Ghana)-(ICAG) took note of these developments in the
banking industry in Ghana, particularly, the question of the Auditors' work
relative to the Seven (7) banks that were placed under receivership.
After a meeting held on Monday, 13th
August 2018 with the Auditors of these banks, the Council of the ICAG decided
to set up a Fact-Finding Committee to:
a) Review the audit files prepared
by the Audit firms on the said banks to determine whether audit work done
supported the opinion issued by the Auditors.
b) Review the specific circumstance
of each bank under receivership and determine whether or not there were
sufficient grounds to initiate disciplinary action against the Statutory
The Fact-Finding Committee completed
its work and presented its final report on Friday, 12th April 2019 to the
Council of ICAG.
Subsequently, the Council in
accordance with Section 16 (2) of the Chartered Accountants Act, 1963, (Act
170), set up a Disciplinary Committee for the purpose of holding an inquiry
into the conduct of Auditors of the Seven (7) banks that were placed under
The Disciplinary Committee granted
hearing to the Auditors of the Banks placed under receivership. The
Representatives were given the opportunity to respond both in writing and
orally to the infractions raised by the Disciplinary Committee.
The following firms appeared before
the Disciplinary Committee: EY Chartered Accountants, PKF Chartered
Accountants, J. Mills Lamptey & Co., Morrison & Associates and Deloitte