Deloitte-Tingo Case: Auditors Call For Fair Investigation
Deloitte came under fire after Hindenburg Research accused the accounting giant of certifying that Tingo has over $470 million in its bank, when it had only $50.
Auditors have called for a fair investigation to find if Deloitte Touche Tohmatsu Ltd. missing a massive accounting fraud in Nigerian firm Tingo Group Inc. was a system failure or at an individual level.
Deloitte came under fire after Hindenburg Research accused the accounting giant of certifying that Tingo has over $470 million in its bank, when it had only $50, according to the Securities and Exchange Commission.
Hindenburg claimed Tingo's inflated financials "could have been spotted by any semi-conscious finance undergrad with severe vision loss", pointing to glaring inconsistencies.
"Clearly, there's more to this than meets the eye and we need fair investigation to establish what was the real facts," Shailesh Haribhakti, chairperson of Shailesh Haribhakti Associates, told NDTV Profit.
Haribhakti highlighted that far more investment is needed in the system and process, which will "prevent difference in reality and reported facts". He emphasised that a lot of work needs to be done by regulators, auditors and auditees.
In case a big firm is involved, regulators have to investigate to see what is going wrong and what type of internal control they are having, according to Ved Jain, founder of VJA Legal.
"Need to go to the next step and find what was the reason for the happening and that can happen only with investigation," Jain said. "By and large, the system is working and is only in exceptional cases, these types of examples come."
One has to identify if the default that has occurred is systemic or at an individual level. The individual failure must be identified, whether it is voluntary or involuntary, according to Jain.
Haribhakti pointed out that there is a perception gap and expectation between what the regulators and the auditee community want from auditors and what the auditors are ready to provide.
"I think the gap will increase as the world embraces artificial intelligence (and) blockchain, which is supposed to enhance the trust in what is reported and is supposed to discover and predict problems about an entity," he said.
Transformation in terms of data capturing, depending on repositories, and bringing in outside perspectives is necessary to help reduce these discrepancies.
However, Jain said that even if an efficient system may be there in the society, there would always be certain exceptions.
"In case, if it is voluntary, the agency will need to take care of it. We cannot put anything on the profession because it is individual behaviour at play," he said.
