Audit firm AHKC suspended over Crescent loan scandal

One of the leading firms of chartered accountants, Aziz Halim Khair Choudhury (AHKC), has been suspended from auditing banks as it did not apprise the central bank of Crescent Group loan irregularities involving around Tk3,000 crore with Janata Bank.

The Bangladesh Bank issued the restrictive order for the firm for one year.

This is the second auditing house the central bank put the ban on, centring loan irregularities after suspending Syful Shamsul Alam & Co, another chartered accountants firm, for two years earlier.

The Bangladesh Bank delisted AHKC from its list of auditors for the year 2020.

According to AHKC, it has appealed to the central bank for exemption from the punishment and will place such request to the Bangladesh Bank board meeting scheduled on Monday.

Contacted, Jamshed SA Choudhury, senior partner of Aziz Halim Khair Choudhury, said they strongly oppose the decision of the central bank.

The firm did not make any financial gain from the audit but faced punishment instead while borrowers and other relevant parties involved in the loan irregularities should be punished, he added.

According to the chartered accountant, auditors are given a very small fee for general inspection, but are expected to conduct an international standard audit which is not fair.

Relevant authorities should provide the audit firms with satisfactory fees to improve audit standards, he claimed.

Raising questions about the Bangladesh Bank (BB) investigation and internal audit of the bank concerned, he said the central bank failed to identify irregularities and now audit firms are being held accountable.

He said AHKC Uttara Branch audited Janata Bank, but the ban will hit its other two branches if the embargo is not lifted.

Crescent Group has a loan scam of more than Tk3,000 crore with the state-owned Janata Bank. It has been charged with garnering fake export bills and taking out loans in collusion with some officials of the bank.

A BB investigation found that Syful Shamsul Alam and Aziz Halim Khair Choudhury were jointly appointed by Janata Bank as its external auditors for 2017.

Aziz Halim Choudhury alone conducted a general audit of Imamganj branch of the bank while Syful Shamsul Alam audited cash incentives.

Both firms are found equally responsible for the annual audit report of the bank.

In the audit report for 2017, no incident of forgery, irregularities, administrative fault or anything harmful for the bank was mentioned.

No information related to severe breach of rule and serious irregularities were included in the report either.

During the audit in the Imamganj branch, Aziz Halim Khair Choudhury failed to find any irregularities.

However, while reviewing the management report, Syful Shamsul Alam identified irregularities regarding the overdue export bills of Crescent Group against which the bank was asked to keep a provision of Tk566.77 crore.

Despite being aware of the forgery of Crescent Group, the auditors allegedly did not inform the Bangladesh Bank about it, which is a violation of the Banking Company Act 1991.

In 1979, the firm was registered as Aziz Halim and Co, and later in 2005, it got registered as Aziz Halim Khair Choudhury.

In 2005, AHKC first made its way to the Bangladesh Bank list of auditors for auditing banks and financial institutions.

It has audited 15 banks and 12 non-bank financial institutions since.

In 2017, the firm was among top eight auditors in the central bank list.