Deloitte Faces Scrutiny over Tongaat Hulett Accounts
Deloitte South Africa has replaced all the senior auditors, including the partner Gavin Kruger (whose LinkedIn profile has now been taken down), involved with the audit of South African agriculture and agri-processing business Tongaat Hulett, according to Business Insider SA.
The move followed a statement by the company to the Johannesburg and London Stock Exchanges that its published results ‘should not be relied on’. The company further said that reliance on unaudited figures and its most recent trading statement in February was ‘no longer appropriate’.
Tongat Hulett shares were suspended on both markets on 10 June, marking the first occasion on which the Johannesburg Stock Exchange has suspended a listing for any reason other than non-compliance with regulations or pending liquidation.
Deloitte has been Tongaat’s auditors for more than 15 years. Eyewitness News says the company has now hired PWC to investigate ‘certain past practices’. Separately, the South African Independent Regulatory Board of Auditors is investigating Deloitte’s role.
The company says its published figures do not reflect Tongaat Hulett’s underlying business performance accurately and that a review ‘is ongoing and incorporates an independent forensic investigation to establish any evidence of whether any of these past practices were deliberate’.
The current timeline suggests the company will publish revised figures in October 2019, at which time the stockmarket listing will also be reinstated. It has already indicated that revenue was misstated to the tune of ZAR 3.5-4.5bn ($237-304m).
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By GlobalDataThe company said: “The adjustments are of a non-cash nature and relate to the reassessment of land sales against the revenue recognition criteria defined by International Financial Reporting Standards and the associated profit margins, a revision to growing cane valuations, and a reversal of costs capitalised to, inter alia, projects, cane roots, maintenance and investor, on a cumulative basis.”
