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Deloitte qualifies Ferrexpo accounts over potential charity ‘misappropriation’

Mining News - Published on Fri, 26 Apr 2019

Image Source: Yahoo Finance
Accountancy Daily reported that auditors from Deloitte have issued a qualified opinion on the annual results from Ferrexpo, a Swiss headquartered iron ore company with assets in Ukraine, over concerns about possible ‘misappropriation’ of corporate social responsibility funds. In a note to the accounts, Deloitte stated that it had been unable to obtain satisfactory audit evidence or explanations to conclude whether the USD 9.5 million of CSR donations advanced to Blooming Land in the year ended 31 December 2018, and USD 24 million in the year ended 31 December 2017, was expended by Blooming Land on legitimate business payments for charitable purposes.

As part of the FTSE 250 company’s CSR programme in Ukraine, since 2013 it had donated to a charity called Blooming Land which funds activities including diabetes prevention, eyesight care and support for the elderly. For the year ended 31 December 2018, the charitable contributions totalled USD 9.5 million, compared to USD 24 million the previous year, bringing the cumulative CSR payments made to Blooming Land to approximately $110 million.

Donations to Blooming Land ceased in May 2018, a decision Ferrexpo said followed continued delays in receiving additional information it had requested, which related to concerns about the use of the donations, information provided on copy bank statements given to the auditors, and also whether or not there were related party transactions involving the company’s CEO. Ferrexpo’s board set up an independent review committee in February 2019 to review the circumstances, and it continues to work with advisers in the UK and Ukraine over the matter.

The company said the independent review committee has made some progress in receiving explanations regarding the inconsistencies contained on the copy bank statements and has received some third party evidence and explanations that could explain bank statement inconsistencies as well as some of the possible discrepancies in the application of funds by the charity. It is undertaking further work to corroborate and verify the evidence and explanations. The interim conclusion found that the charity was not a related party of the group, its CEO, the majority shareholder of Ferrexpo or its executive management, as defined under applicable accounting standards. At this stage, the board said the independent review committee cannot yet conclude as to the ultimate use of the funds by the charity, however, there are indications some could have been misappropriated

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Posted By : Rabi Wangkhem on Fri, 26 Apr 2019
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