R2.1bn

CityPress - - Business -

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.

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