SECP Imposes Penalty on Audit Firm for Typos in Financial Statement

The Securities and Exchange Commission of Pakistan (SECP) will impose penalties on the listed companies that make typo errors in their financial statements.

In this connection, the SECP has imposed a penalty of Rs. 50,000 on Ghalib & Co. Chartered Accountants who are the auditors of Tri Star Power Limited.

The order revealed that the SECP declared that the stance of the authorized representative that mistakes and typo errors in the financial statements have no material impact on the health of financial statements is not plausible on the grounds that is the responsibility of the auditor to ensure that correct disclosures are provided in its report to the members and any inaccurate information in the audit report makes the negligence more significant as it impacts the overall stakeholders, especially in case of listed companies where the auditor is required to be extra cautious.

The SECP has gone through the facts of the case, quoted references, and considered the written submissions of the respondents in light of the relevant provisions of the Companies Act. In this context, it is noted that the auditor and its authorized representative have accepted the anomalies in disclosures in the financial statement for the year 2020 and misreporting in the audit report for the year 2020, citing them as typographical errors however similar errors/misrepresentation relating to disclosure about the related party is observed in the audit report for the year 2021.

The SECP has concluded that the company failed to discharge its responsibilities in accordance with the provisions of Section 249 of the Act and is hence liable for a penalty in terms of Section 253 of the Act.