London: The NMC Health fiasco has now arrived at the doors of EY, the UAE healthcare operator’s long-time auditor. The UK's accounting regulator has launched investigations into EY (Ernst & Young) on how it managed to sign off on NMC’s financial results for 2018.
"On 15 April 2020 the Financial Reporting Council opened an investigation into the audit by Ernst and Young LLP of the financial statements of NMC Health for the year ended 31 December 2018," the FRC said in a statement on Monday, according to Reuters. The FRC has powers to fine and bar auditors it finds that have failed to comply with its standards.
In particular, the regulator would want to know how the audit process failed to reveal bank loans far more than the $2 billion that NMC was supposed to have at the time. (NMC last reported its financials for the first six months of 2019.)
Banking industry sources speaking to 'Gulf News' have repeatedly raised the question of how an audit firm, and especially one of EY’s stature, could miss out on the non-reporting of $4 billion plus worth of loans that were taken out and never disclosed via the financials.
All through until internal investigations were launched, NMC Health’s outstanding to banks were reported as just over $2 billion plus.
EY had recently stepped down as auditor of NMC Health's sister company, Finablr, which owns UAE Exchange Centre. Just recently, Finablr announced that it came across $1.3 billion in undisclosed funds.
But for now, EY remains in the saddle as NMC’s auditor.