ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has rejected the non-QCR audit of National Productivity Organisation (NPO), an attached department of the Ministry of Industry and Production.
Documents available with this scribe revealed that the commission, in its letters to the NPO chief executive officer on February 16 and March 18, 2018, stated that non-Quality Control Review (QCR) auditors are not allowed to conduct the audit of accounts, adding that the accounts so audited shall be regarded as unaudited which shall attract applicable adjudication proceedings as per the scheme of law.
“It is therefore advised, in the interest of the company, to comply with the scheme of law in letter and spirit and appoint QCR-rated auditors within 30 days of the date of this letter and report the same to this office,” the commission stated.
The SECP reserves the right to adjudicate upon the provisions of law, which have already been violated, the document read.
Earlier, SECP asked NPO to clarify its position on the appointment of G Hussain & Co as auditors of the company. Officials claimed that the firm (G Hussain and Co) is a non-QCR audit firm and it had conducted the audit of NPO.
“KPMG used to carry out the audits of NPO but now NPO CEO Abdul Ghaffar Khattak has assigned the task to his ‘friend’ company, as both used to work together in the Emirates Investment Bank in Dubai,” sources informed. “G Hussain & Co has neither conducted the audit of any public sector organisation nor has it fallen under the requirements of SECP.”
Sources said that in the 22nd board meeting, Abdul Ghaffar Khattak tried to get approval for the said firm but the board rejected the proposal, resulting in the resignations of four members. Regardless, Abdul Ghaffar Khattak, despite knowing that G Hussain & Co is a non-QCR audit firm, appointed it to carry out statutory audits of NPO from 2013 to 2017 and gave Rs1.6 million to the firm against these audits, they added.
“Khattak kept the board and the ministry in dark and in 2018 called the annual general meeting of NPO and got approved the 2016-17 audited accounts of NPO, which was a clear violation of rules and was tantamount to fraud with the NPO members,” sources asserted.
The Auditor General of Pakistan team also pointed out that G Hussain & Co is a non-QCR audit firm and the amount given to the firm may be recovered and responsibility should be fixed on those who are behind this act.
“Now, the high ups of the department are conducting talking the audit services of Farouq Ali and Co, a QCR firm, just to save themselves from the earlier decision,” sources said.
They said the ministry has taken notice of the entire situation and an inquiry committee would be constituted to unearth this scam and to hold the accused to the task.
Taking to Pakistan Today, the NPO CEO said neither a chief executive nor a board chairman can recommend or appoint auditors.
“NPO annual general meetings haven’t been held since 2007. The appointment of G Hussain & Co was confirmed to SECP in Feb 2017, but the commission sent its objections in March 2018 when the audit was already completed,” he claimed. “The NPO board has assigned the audit to QCR-rated auditors appointed as per the procedures of Companies Act. The audits have now been completed and will be sent to SECP as per law.”