Muscat: Wielding the whip against dubious practices by audit firms, the Capital Market Authority (CMA) yesterday announced the suspension of well-known audit firm KPMG from auditing entities regulated by the Authority for a period of one year. It marks the first time that one of the so-called Big 5 international audit firms has been taken to task in this dramatic fashion by Oman’s market regulator.
“This suspension is the result of CMA’s inspection of some listed entities where major financial and accounting irregularities were discovered by the CMA team. This had prompted CMA to enforce immediate corrective measures in those listed entities to protect investors and other stakeholders,” the Authority said in a press statement.
The CMA however noted that the decision does not affect the engagements where the firm has already been appointed. “In such cases, the firm can continue in the capacity of auditor and discharge its contractual obligations. The legal and regulatory provisions in Oman grant KPMG a legal right to appeal against this decision before independent appellate authority,” it stated.
CMA undertook a comprehensive review of the causes that included understanding the reason of the non-discovery and non-reporting of such irregularities by the auditors. This review established professional negligence on the part of some audit firms that warranted disciplinary measures against them in the interests of the investors and other stakeholders. CMA is also further strengthening its regulations in line with its learning gained from recent cases to avoid their recurrence, it stressed.
“At the same time, CMA also wishes to sincerely acknowledge the positive contribution of the audit profession as a whole in Oman that ensures integrity of financial reporting being a critical pillar of investor protection and Corporate Governance. CMA also takes on record the fact that most of the accredited audit firms have shown their adherence to International Standards on Auditing (ISA) while also ensuring that the financial reporting is strictly in compliance with the requirements of International Financial Reporting Standards (IFRS) that are mandatory in the Sultanate,” the Authority stated.
The CMA said it expects audit firms against whom recent disciplinary measures have been taken to carry out comprehensive internal reviews to identify causes and make required course corrections. CMA also advises such firms to implement robust internal quality control procedures to avoid such occurrence in future.