AOB bars firm from conducting audit proceedings

ISLAMABAD: The Audit Oversight Board (AOB) has revoked the registration of an audit firm and thereby stopped it from carrying out the audit of public interest companies.

In line with its regular monitoring plan, AOB initiated an inspection of records to assess the audit quality of the firm, Mudassar Ehtisham & Co., in March 2019. The firm requested that inspection be delayed by three months. The firm’s request was declined because the inspection was of past audit records that should have been readily available. 

Later, the firm did not let the AOB inspectors conduct the inspection on the scheduled date when they visited the office of the firm in Lahore. Accordingly, AOB served a show-cause notice on the firm and provided an opportunity to explain its position in writing and also provided an opportunity of being heard.

In the third hearing on 30 April 2019, the firm

informed AOB that it is willing to get its records inspected. However, when AOB
inspection team visited the office of the firm on 6 May 2019, it still did not
provide complete information and the information that it provided carried
instances of falsification.

AOB provided further opportunities to the firm

to explain itself, however, the firm did not submit any written explanation,
nor did it attend the opportunity of being heard.

Not providing required information to the

regulator and falsification of the provided information are grave violations.
At that stage, AOB informed the firm that under the circumstances, it shall
have no option but to bring the matter to its logical end through an
appropriate order.

“Shareholders and lenders rely on audited

financial statements of companies for their financial decisions and they trust
the external auditor's opinion that the financial statements prepared by the
management present a true and fair view of the company's financials,” said AOB CEO
Usman Hayat.

AOB is the independent audit regulator in

Pakistan established by the parliament in 2016 to protect the public interest
by overseeing the quality of audit of financial statements of public interest
companies.

There are more than 1,000 public interest

companies in Pakistan which include all listed companies and non-listed public
sector companies. Out of over 550 audit firms in Pakistan, 121 have a
satisfactory quality rating and 101 are currently registered with AOB. Only the
audit firms registered with AOB can audit the financial statements of a public
interest company.