Dubai: A lawsuit has been registered by the Dubai engineering firm Drake & Scull International against the audit firm PriceWaterhouseCoopers for shortcomings related to its handling of the company's audit. The case has been registered in the Dubai Court of First Instance.
This follows findings after Drake & Scull appointed an accounting expert from the accredited offices of the Dubai Courts. This revealed 'facts that were hidden throughout the previous years' when PwC was handling the audit.
"It was revealed that PWC violated the approved accounting standards," said the company. "And showing it in the budgets throughout the previous year’s period and by exaggerating the company’s financial position.
"The expert's report showed that the company incurred total losses for previous years amounting to Dh5.50 billion."
Bankruptcy proceedings
Drake & Scull, at one time among the biggest names in the UAE and Gulf construction sectors, has been going through an extremely trying phase since 2018, when it was first revealed that the company had failed to clearly state the extent of losses sustained through the years.
Currently, the company runs the risk of going into a court-order liquidation. But Drake & Scull's current management has stated that it has the backing of creditors and lenders to try and effect a sustainable turnaround.
The lawsuit against PwC should be seen against the bigger backdrop. It was mid-2018 that Drake & Scull first issued a statement that its accumulated losses were in the region of Dh5 billion and not what had been issued until that point.
"PwC had previously audited the accounts of Drake & Scull International during the period from 2011 to 2017, in addition to preparing consultative report during 2017, for the purposes of restructuring the company and bringing in new investors," the engineering firm said in its new update.
This was during the time when the former management was at the helm of the Dubai company.
Under a new management, new auditors were brought in and audited the company’s accounts from 2018-22. They then issued the report which showed the accumulated losses. "It did not appear in previous financial statements," Drake & Scull notes. Plus, the past statements also exaggerated the company's project portfolio at the time.
All of which has now culminated in the lawsuit against PwC.
