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Choppies blames Audit firms for stock exchange woes

24 Mar 2020 at 18:29hrs | Views
Problems with two audit firms signing off on financial statements of the Choppies group for the years ended 30 June 2016, 2017 AND 2018 have been cited by the company in a notice to shareholders ahead of a pending Extraordinary General Meeting.

Shareholders have been told that although KPMG Botswana signed the auditor's report in respect of the company and consolidated group financial statements for 2017, and the annual report and such financial statements being approved at the annual meeting of shareholders in November 2017, audit reports for the annual financial statements of the group's Botswana and South African subsidiary companies were not signed off by KPMG for the 2017 and, in some cases, the 2016 financial year.

KPMG was replaced as group auditors by shareholders at an extraordinary general meeting in February 2018.
The company subsequently engaged KPMG to rectify the situation but KPMG refused to complete the audits, "terminating" all agreements with the group and its subsidiaries in a letter dated 21 January 2020.

Choppies has reserved its position against KPMG. More auditing woes followed when PwC Botswana signed off the audit report for the group and the holding company's annual financial statements for the year ended 30 June 2018, without signing off the audit reports of the Botswana and South African subsidiary companies for the same period.

Choppies has advised the Botswana Accounting Oversight Authority, the Companies and Intellectual Property Authority and Botswana Unified Revenue Services and the South African regulatory and tax authorities of the situation.
On 16 March 2020 PwC Botswana gave notice of termination of their role as auditors of the Botswana subsidiaries of the company citing regulations published by the Independent Ethics Standards Board for Accountants (IESBA) as adopted by the Botswana Institute of Chartered Accountants (BICA) in respect of actual or threatened litigation by an audit client or shareholders or management of an audit client which may constitute a threat to independence.

PwC is facing threatened litigation in an action for damages by significant shareholders of the Company, Ramachandran Ottapathu and Farouk Ismail, who are also directors of the Botswana subsidiaries on account of alleged: -

•    failure by PwC Botswana to act on an actual or perceived threat to its independence;

•    breach by PwC Botswana and/or Rudi Binedell, audit partner, of rules of the relevant code of ethics in respect of independence; and

•    an unjustifiable delay in the completion of auditor's report of the company in respect of the financial year ended June 2018 which allegedly resulted in the suspension of and a prolonged period of suspension of the shares of the company trading on the Botswana and Johannesburg Stock Exchanges.

Choppies  said: "It should be noted that the fact that PwC signed the auditor's report in respect of the financial statements of the company and consolidated group financial statements for the financial year ended 2018 on 13 December 2019, means PwC must have considered the financial statements of the subsidiaries of the company."

Source - online
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