EY gets injunction against CMA in Uchumi investigation
Consultancy firm Ernst & Young has received a temporary injunction barring the Capital Markets Authority (CMA) from investigating the firm over its audit of Uchumi Supermarkets.
The capital markets regulator has been investigating claims that Ernst & Young failed in its role of ensuring financial accountability by the retail chain.
In his ruling, Justice Joseph Onguto restrained CMA from acting on a notice to show cause letter against the audit firm pending hearing and determination of the case.
The audit firm argues that the move by the Authority is unreasonable and unfair adding that the firm had not been informed by the Regulator of an inquiry involving it as it relates to the financial statements of Uchumi supermarkets.
“During our meetings CMA informed us that it was reviewing the KPMG forensic reports and merely seeking clarification from the audit firm and not conducting an inquiry or investigations as indicated in the letter of 31st of August this year,” reads the petition
CMA is interested in EY’s role during Uchumi’s 2014 rights issue which raised Sh1.4 billion and subsequent auditing of the its financial results.
Through lawyer Ochieng Oduol, the audit firm told Justice Onguto that despite requesting for the KPGM report which was the basis of the letter, CMA only sent extracts.
In the case Ernst & Young says the CMA requested them to share with it the presentation made to the board OF Uchumi Supermarket dated September 4.
The audit firm argues that there was no further communication between the two until the August 2 this year when CMA issued a notice to show cause.
The audit firm further argues that it did not participate in the alleged inquiry adding that it has have never been informed that it is under inquiry or investigations by CMA.
“During our meetings CMA informed us that it was reviewing the KPMG forensic reports and merely seeking clarification from the audit firm and not conducting an inquiry or investigations as indicated in the letter of 31st of August this year,” reads the court document.
Ernst & Young was replaced as Uchumi’s auditor earlier this year by KPMG.
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