KPMG has been barred from auditing in Abu Dhabi as it selects a new regional leader

Emilio Pera was appointed Lower Gulf CEO of a Big Four corporation after months of divisional turmoil.

KPMG is unable to gain new audit contracts in Abu Dhabi, as the Big Four firm has been removed from the list of accountants authorised to sign off on companies' financial accounts.

The Abu Dhabi Accountability Authority's action comes only weeks after a rival agency in Dubai fined KPMG and one of its former partners $2 million for mistakes in its auditing of Abraaj, the bankrupt emerging markets private equity firm.

Emilio Pera, the veteran partner elected as the new chief executive of KPMG Lower Gulf on Friday following months of turmoil at the business, which operates in the United Arab Emirates and Oman, may confront additional obstacles as a result of the suspension.

Since the summer, allegations of nepotism, cronyism, and poor corporate governance have plagued the company, prompting the departure of chairman and chief executive Nader Haffar last month.

The turmoil, which included a demand by some partners that KPMG International suspend Haffar and the Lower Gulf board, raised questions regarding the consistency of standards across KPMG's global network of locally owned businesses and the effectiveness of the Big Four firm's international bosses in policing those standards.

The ADAA did not immediately react to a request for comment nor did it publish the grounds for KPMG's withdrawal from its list of approved statutory auditors, which is updated every three months. The ADAA monitors government agencies and state-affiliated businesses to encourage openness.

KPMG Lower Gulf stated that their application to renew its licence to do statutory audits "was returned requesting additional information" and that "the recent status change has no impact on our present statutory audit engagements."

“We are actively engaging with them to address all technical enquiries,” the firm said, adding that it was “committed to delivering the highest-quality audit service”.

Pera, who will take over on January 1st, was elected by the firm's equity partners after a referendum. He defeated audit director Osama Harmouche and consultant Wejdi Harzallah.

The election was overseen by a KPMG committee and the law firm Freshfields in response to allegations that an earlier vote to extend Haffar's term until 2027 was a "sham."

Pera will be responsible for responding to the recommendations of Freshfields' governance assessment and assuring the firm's 3,400 clients in the area, including Abu Dhabi National Oil Company and sovereign fund Mubadala Investment Company, that the business will be stabilised.

After the upheaval at KPMG Lower Gulf, a number of partners quit the business, with rivals attempting to attract angry partners and personnel.

Pera had commanded the Lower Gulf audit division in the wake of the Abraaj scandal, but she was dismissed from her position at the beginning of this year and made interim head of tax.

He said he was “deeply grateful” to Haffar and hoped to “build on his achievements”. “We continue to strive towards being the most trusted and trustworthy firm of choice for our clients.”

By fLEXI tEAM