Financial Times

KPMG denies charges of bad auditing on Pramuka

KPMG Ford Rhodes Thornton and Company last week denied allegations that it had not carried out a proper audit of the accounts of the failed Pramuka Savings and Development Bank.

"KPMG is firmly of the belief that we have carried out adequate work in respect of the above audit and have discharged our responsibilities accordingly," it said in a statement. "We stand by our work and report thereon."

The last audited accounts issued for Pramuka Bank for the year ended March 31, 2001, released on August 30, were qualified in respect of several matters.

These include retention of provident fund contributions of Pramuka Bank employees within an internal private provident fund without approval from the concerned authorities and improper accounting of interest income that should have been suspended.

The KPMG audit report also drew attention to the absence of undated valuation reports in respect of properties obtained as security for loans, investing of retiring gratuity monies of employees in an Employee Share Ownership Scheme, exceeding limits specified by the Central Bank for equity investments and exceeding limits specified by the Central Bank for owning immovable property.

KPMG said the accounts for March 31, 2001 also had "extensive disclosures" of related party transactions including those with Pramuka Merchant Corporation.

"Management letters were addressed to the Board of Directors, conveying several matters of internal control weaknesses," the statement said.

The audit report relating to the accounts for the year March 31, 2002 has not been issued, it said.

"KPMG concerns on this audit were discussed with both senior bank officials as well as Central Bank officials, details of which we are unable to disclose for confidentiality reasons," the statement said.

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