Red flags appear to have been raised on the going concern status of RT Briscoe Plc by KPMG Professional Services, its independent auditors, going by Businessamlive’s careful examination of the wordings of their opinion contained in the Auditors Report of the company in the 2016 Annual Report and Financial Statements at page 22.
Specifically, the auditors issued what they called a “qualified opinion” on the annual report, an auditing jargon that is often used to draw attention to the fact that something material that could affect the company significantly has been observed in the course of auditing; and which needs the attention of those who might have interest in the company.
The independent auditors particularly drew attention to ‘material uncertainty’ and wrote about total liabilities exceeding total assets by as much as N3.4 billion, meaning that if the assets of the company were to be sold off there would still be a shortfall of N3.4 billion needed to pay creditors.
“Without further qualifying our opinion, we draw attention to Note 29(a) and Note 32 to the financial statements. Note 29(a) describes the uncertainty related to the outcome of the lawsuit filed against the Company by Diamond Bank Plc, while Note 32 indicates that the Company incurred a loss of N3.1 billion during the year ended 31 December 2016 and, as of that date, the Company’s current liabilities exceeded its current assets by N7.9 billion, while the total liabilities of the Company exceeded total assets by N3.4 billion,” they wrote.
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The auditors were of the view that these observed conditions, “along with other matters as set for in Note 32, indicate that a material uncertainty exists that may cast significant doubt about the Company’s ability to continue as a going concern,” they averred.
They observed that N1.1 billion had been included in an impairment loss for the year ended 31 December 2015 and that this had been written off to the profit or loss account for that year.
“We were unable to obtain sufficient appropriate audit evidence regarding the nature and accounting for the underlying transaction that related to the amount because management was unable to provide satisfactory explanations and relevant supporting documents.
“Our audit opinion on the financial statements for the year ended 31 December 2015 was modified accordingly. Our opinion on the current period’s financial statements is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures,” the auditors pointed out.
The auditors said they did their work in accordance with International Standards on Auditing (ISAs), noting that their responsibilities “under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated and separate Financial Statements section of our report.”
The declared their independence by stating that they were independent of the Group and Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to their audit of the consolidated and separate financial statements in Nigeria, and stressed that they fulfilled their other ethical responsibilities in accordance with these requirements and the IESBA Code.
