ICEA LAUNCHES MASSIVE INSPECTIONS OF AUDITORS
The Commission on Quality Control with the Institute of Certified Expert Accountants (ICEA) launches inspections of the operation of auditors in the past three years. According to the Commission's Chairperson Nikolina Gancheva, some 190 auditors are to be inspected by the ened of 2003. After the completion of inspections, the results from them will be described in a special report, pointing out the established mistakes and lapses. The sanctions to be imposed on the auditors who were found at fault will be decided by the Disciplinary Commission with the ICEA. Ms. Gancheva explained for the BANKER weekly that the expert accountants who were at fault shall be obliged to attend re-qualification courses, and the biggest transgressors will be revoked the right to carry out audits. The first wave of inspections will include about twenty auditors, listed by the Deputy Finance Minister Gati Al Djeburi in the beginning of 2002. The list has been presented to the ICEA. Mr. Al Djeburi flatly refused to tell the names on the list, but he said the financial results in their audit reports raise suspicions about their trust-worthiness. It won't be correct to tell the names of the people I have listed and sent in aletter to the ICEA. The inspection of their work might show no lapses in their audits, the Deputy finance Minister said.According to souces of BANKER, Mr. Al Djeburi's mistrust was awaken by the expert accountants who audited last year the companies Magnun-D OOD and Energy Cable (51% of which capital owned by ID Capital, controlled by REI Holding). The list sent to IDEA is also said to include the auditors who certified the balance sheets and reports of ZK Crystal and Sugar Plants of Gorna Oryahovitsa (in October 2000 the Privatisation Agency sold its shares to the MEBO Sugar Invest, behind which, according to rumours, is the owner of Litex Grisha Ganchev). The auditors of Vinprom Peshtera (owned by the British Brighton Distillers Group) and of Global Market and Sirius Invest (behind which are off-shore companies, based on the Vigin Islands) are also among the first to be inspected. Ms. Gancheva specified that it made a strange impression to the Deputy Finance Minister that the companies listed in the letter to ICEA had reported a very low profit rate.We'll check if the colleagues who audited these companies had done their work conscientiously. But the fact that a company has a low profit rate cannot give grounds for suspicions toward it or the accuaracy of its book-keeping. And how can we say if a profit rate is low or not? Nowhere, even in the National Statistics Institute (NSI) there is data about the average rate of profit for a certain branch. We simply do not have a basis for comparison unlike many other countries, in which such data are published at least twice a year. According to me, the NSI should be obliged to announce such data, so that we could compare the results of the companies audited by us and seek the reason for the lower profits, announced by some of them, Nikolina Gancheva commented.The results of the work of IDEA's Commission on Quality Control and Disciplinary Commission should be announced in public, Ms. Gancheva believes. According to her, most of the auditors are conscientiously performing their duties, but like in any profession there are black sheep here, too. And in order to increase the trust in expert accountants, the names of the transgresors should not be concealed. Legends are told in these circles about their colleagues who audit some 100-150 firms annually. And for anyone who is slightly acquainted with the work of auditors, it is clear that it is not in the capability of a super professional even to audit so many balance sheets and reports within a year. Rumours have been going around for quite a long time that some expert accountants sign empty balance sheets and reports.There are not a few cases of established violations by auditors in ICEA's history, but they have not been made known to the wide public. According to one of the reports of ICEA's Disciplinary Commission, violations were established when the annual accounting report of the company Victoria Investment was certified by the auditor Vassil todorov. The notorious Zhivko Kirilov and Mihail Dinev were also sanctioned by the same commission to pay fines of BGN1,000 for uncorrect certification of the accounting documents for the eyars 1996 and 1997 of the scandalously known Montana-based company Agropromstroy BD Co and its subsidiary Agrosugen. The auditor Olga Milenkova, who became notorious as a trustee in bankruptcy of Balkan Airlines, was also fined by BGN1,000 for her violations as an expert accountant. But these inspections, as Ms. Gancheva specified in front of BANKER, were made after signals, and as of 2003 the Commission on Quality Control will be inspecting in the course of three years all auditors. Those who are caught in serious violations shall be liable to control each year.