June 22, 2020
If corruption is widespread in a country, it strikes in all economic sectors. It is a fact that we find it difficult for someone to argue otherwise. Therefore, when the risk of corruption is high in a country, corruption risk is also high in all institutions and companies of the public, private, and civil society. We do not believe that there is a sector or service immune from corruption in a country, while corruption has almost become a way of life. These sectors and services include the banking sector and audit services provided by the independent auditor.
We are highly skeptics and alert that many independent auditors in many developing countries, including the Arab and African countries, aid and abet their clients in tax evasion, money laundering, and financial statements fraud.
The American Anti-Corruption Institute (AACI)
We have a deep concern about the audit services provided by independent auditors, specifically in developing countries. We are highly skeptics and alert that many independent auditors in many developing countries, including the Arab and African countries, aid and abet their clients in tax evasion, money laundering, and financial statements fraud. The International Standards on Auditing, issued by the International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB), call on the auditor to be always independent when he delivers his audit services. Independence shall be in appearance and in fact. When an independent auditor continues to provide his audit services to an entity for more than two decades, we do not believe the auditor is independent.
We are not surprised by the existential threat EY faces by three severe audit cases. Dubai gold company and NMC Health are two of these cases stem from Dubai and Abu Dhabi in the United Arab Emirates
The American Anti-Corruption Institute (AACI)
As a result, we have substantial doubts about the effectiveness of the audit services provided to financial institutions, including central banks, in developing countries. We are not surprised by the existential threat EY faces by three severe audit cases. Dubai gold company and NMC Health are two of these cases stem from Dubai and Abu Dhabi in the United Arab Emirates [note] Tabby Kinder and Dan McCrum, Financial Times, June 8, 2020, EY fights fires on three audit cases that threaten its global reputation, https://www.ft.com/content/576e4c7f-93e5-4e8a-b5ba-5e1161533c5a?segmentid=acee4131-99c2-09d3-a635-873e61754ec6 [/note]
In some countries, the audit profession is a pillar of corruption.
The American Anti-Corruption Institute (AACI)
We call on the International Federation of Accountants (IFAC), the regulators of stock exchanges, the concerned regulators, and donors community to exert more pressure on the governments of developing and developed countries. We believe that many developing countries are grossly negligent in regulating and monitoring the audit profession and financial institutions. Corruption, money laundering, and financing terrorism thrive when the audit profession and financial institution sink in a corrupt environment. In some countries, the audit profession is a pillar of corruption.
