Auditor challenges leaves EMBD unaudited for a decade


WEEKS after the Community-Based Environmental Protection and Enhancement Programme’s (CEPEP) board complained to a Joint Select Committee (JSC) that issues with an auditor caused its billion-dollar financial audit backlog, another state-run company raised a similar concern.

Chairman of the Estate Management and Business Development Company Ltd (EMBD) Shameer Mohammed on Wednesday said the auditing firm unexpectedly pulled its service, so audits for 2013-2022 are still due in 2023.

EMBD receives an annual subvention from the Ministry of Agriculture of approximately $40 million.

During a Public Accounts (Enterprises) Committee on financial accounts for 2015, Mohammed said the auditor did not act fairly, ethically, and appropriately. It's a similar complaint the Cepep board made before the same committee on March 2, when it said it was unable to retrieve documents from a private auditor after Cepep’s server crashed in 2015, during an audit of the 2009-2014 financial years.

In EMBD's case, the auditor suspended then withdrew its services before completing the audit.

“We got to the point where they were not prepared to produce anything...Looking at the timeline the company was misled by the auditor. Having recognised that and cognisant that we were not getting anywhere after so many years we acted prudent(ly) and we took a bold step to go with another firm.”

In a letter to EMBD on July 19, 2019, Mohammed said the auditor’s reason for withdrawal was its “due diligence had expired.”

Mohammed said the auditor’s conduct was unacceptable and it further violated terms and conditions and misled the organisation.

He gave a timeline of the auditor's services as of 2009.

The then board reappointed the auditing firm in 2009 after it successfully submitted 2007 and 2008 audits. Mohammed said the 2009 audited financial statement submitted by the firm, in 2011, lacked details on the government grants. The auditor promised to address this issue in its 2010 statements.

In 2014, the auditor was reappointed for the 2011-2012 audits. When a new board was appointed in 2015, there were five years of financial statements outstanding (2011-2015).

After a three-year delay, the auditor submitted the 2011-2012 audits.

Even after the issues, EMBD selected the auditor, following a tender in 2017, to clear the 2013-2015 financials. The auditor was selected as the preferred bidder because it offered a discounted fee of $450,000 from the $620,000 original price.

The auditor promised to have the audits done and submitted in ten weeks. But, Mohammed told the JSC, these are yet to be completed.

The auditor’s auditing procedures –some of which were never disclosed in the bid proposals– threatened the confidentiality of active matters before the court. Acting on legal advice, EMBD did not provide requested documents to the auditor to prevent any compromise of legal proceedings which arose under the previous board. But the board tried to provide alternative documents to trace the company’s spending to the auditor.

Despite written assurances to have the 2013-2015 audit completed by the third week in August 2019, the auditing firm's head office in Europe suspended the audit immediately in July. All of the firm's staff withdrew until further notice.

Mohammed said, “(The auditor) indicated that its client's due diligence had expired in July 2019, and in updating the due diligence (the auditor) was advised by its European head office that to continue to external audit at EMBD a meeting between the auditor and a forensic investigator would be required. It said the firm would require its own forensic specialist to perform appropriate procedures to verify the forensic audit conclusions. ”

The auditor advised EMBD that it would have to cover the additional cost. But the company already was in the process of conducting its own forensic audit.

Attempts to continue the audit were unsuccessful, and the firm withdrew its services. In 2021, during a special shareholder meeting, the auditor was removed.

EMBD then appointed Grant Thornton ORBIT Solutions Ltd as the new auditor for the financial years, 2013-2015.

“At this end, we have taken the best possible steps to ensure compliance without compromising or duly exposing EMBD and the State,” Mohammed said.

Mohammed couldn’t commit to the completion of all the outstanding financing statements but assured the committee that his team is “aggressively perusing a pathway forward.”

EMBD is charged with the development and distribution of all state, residential, estate and agricultural lands.

The company sub-leases land to farmers and other agencies in accordance with the government’s policies.

The EMBD is also responsible for dealing with the leases for two-acre agriculture parcels to be developed for Caroni 1975 VSEP employees.


"Auditor challenges leaves EMBD unaudited for a decade"

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