THE CLAIM THAT DELOITTE FACES FROM FORMER EMPOWERMENT PARTNERS OF AFRICAN BANK INVESTMENTS LIMITED RELATED TO THE FAILURE OF THE BANK, AS DELOITTE WAS THE AUDITOR outstanding loans and, in turn, determined whether the loans ended up in the new African Bank or RDS.
“We do not think it is a major thing from our point of view,” he added.
Deloitte is itself under a cloud as it faces a R2.1 billion claim from the former empowerment partners of African Bank Investments Limited (Abil) related to the failure of the bank.
Deloitte was the auditor of both Abil and African Bank at the time of their bankruptcy.
Another key issue raised by Deloitte was that RDS had completely written off its full portfolio of advances to zero.
However, Deloitte said because RDS had demonstrated an ability and experience in collecting significant cash, it disagreed with that decision.
“Given the amount of these post write-off recoveries, a full write-down of these advances is not appropriate,” said Winterboer.
“Therefore, the net income, reserves and the net advances are understated by an estimated R419 million, R831 million and R1.25 billion, respectively.”
Winterboer defended the decision to write off RDS’ full portfolio of advances.
“We have adequately provided [for writeoffs] ... I think it is a technical matter,” he said.
“If we had put any number there, we would have been wrong [about the extent of recoveries of loans],” he added.
Deloitte also brought an emphasis of matter. This is defined as a paragraph, included in an auditor’s report, that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements.
“The financial statements are prepared in accordance with the company’s own accounting policies to satisfy the financial information needs of the company’s stakeholders,” said Deloitte.
“As a result, the financial statements may not be suitable for another purpose.”
RDS reported a profit for the year to September 2016 of R2.4 billion from a loss of R7.2 billion in the previous year.