OLD AFRICAN BANK SOUNDS NEW AUDIT ALARM
The auditor of the old African Bank, currently under curatorship, has raised the alarm about the company’s latest financial results on three key counts.
This comes as the bank reported it had turned an annual multibillion-rand loss into a multibillion-rand profit.
The old African Bank, now known as Residual Debt Services (RDS), still has claims worth billions of rands to settle. These include money market funds held by clients who invested in African Bank debt instruments.
Its auditor, Deloitte, has raised a qualified opinion regarding two key matters with RDS. This means a matter must be materially or financially worth consideration for an auditor to qualify a report.
Firstly, Deloitte said it was unable to determine whether any adjustments were necessary to the way in which assets were split between the new African Bank – which was launched in April 2016, after the old African Bank went bankrupt in August 2014 – and RDS.
This means that the auditor was uncertain about whether the new African Bank and RDS had divided the “good” and “bad” books between them correctly.
RDS curator Tom Winterboer said: “As curator, I sold assets and the [new] African Bank accepted them. We did a calculation of fair value and we had that fair value profit.
“All they [Deloitte] are saying is that maybe things could have been sold to good African Bank and the [credit] scorecard did not work properly ... Arriving at that score [was important].”
The score assessed the asset quality of the