DELOITTE’s Saudi Arabian arm is on the cusp of potentially being banned from auditing companies in the oil-rich country.
The threat stems from Saudi’s market regulator, the Capital Market Authority (CMA), telling businesses registered in the Middle Eastern state to stop using its local services, in a circular seen by Bloomberg.
The 27 November dated circular decrees that all publicly traded companies under its regulatory umbrella should steer clear of working with Deloitte’s Saudi Arabian arm from 1 June 2015. It says the ban could be revoked if the Big Four firm resolves an unnamed dispute.
The newswire said the issue relates to Deloitte’s audit work for construction industry service provider Mohammad Al-Mojil Group (MMG), affirm whose shares haven’t traded since July 2012.
Deloitte, which has operated in Saudi for over 60 years, confirmed to Accountancy Age that the Saudi CMA had issued a circular referring to a decision by the Committee for the Resolution of Securities Disputes (CRSD), regarding a probe of a former audit client of Deloitte & Touche Bakr Abulkhair & Co.
A Deloitte spokesman said: “Although the firm is surprised at the committee’s decision, the firm respects the CMA’s important role in regulating the Saudi capital markets, and intends to fully cooperate with the CMA. The firm will also be actively engaging with the CMA, as well as other regulators and relevant stakeholders, to address this matter as soon as possible towards a satisfactory resolution.
“The firm strongly believes that its audit of the client in question was in accordance with applicable standards, takes the professional and public interest responsibilities entrusted to it extremely seriously, and is committed to the highest standards of quality, independence and ethics in the services offered to its clients.”
It adds that the circular advises them on “engagements with Deloitte & Touche Bakr Abulkhair & Co. in relation to audit services from June 1, 2015 until the case is concluded, and the instructions are directed only to listed companies and entities authorized by the CMA”.
Saudi Arabia is currently overhauling its rules on corporate governance as it prepares to open its £300bn stock market to foreigners next year.
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