URGENT Dubai fined a huge company AED 122,000 for misleading financial statements
Dubai's Financial Services Authority (DFSA) fined former finance officer Remi Ishak Dh122,000 for his role in account breaches and for making false statements pertaining to a publicly traded firm. Both of these transgressions were exposed by Mr. Ishak's statements.
Former Dubai CFO Fined for Account Breaches and Misleading Statements
Formerly, Ishak served as the CFO of Equitativa and Emirates REIT, both of which are mutual funds traded on the Nasdaq Dubai platform. Commercial, retail, and institutional properties all make up the fund's portfolio.
The DFSA fined Equitativa in December 2021 for making false claims about Emirates REIT and for failing to produce financial statements in accordance with International Financial Reporting Standards (IFRS). The authorities also came to the conclusion that Ishak was complicit in these violations.
Misleading Statements and Omission of Unpaid Rent Provision
Ishak made public remarks in 2018 while serving as CFO regarding a school property that the previous tenant had vacated with over Dh9 million in unpaid rent. He stated that a new tenant had been secured to start in the following academic year, implying that the property's revenue and valuation would be unaffected. However, there was no binding offer or agreement at the time, rendering these statements misleading.
Additionally, Ishak approved Emirates REIT's 2018 half-year financial statements without including a provision for unpaid rent or any impairment of the asset's value, in accordance with IFRS. Instead, the asset was reported as 100 percent occupied, assuming a long-term tenant was in place.
Failure to report relevant information to auditors
Ishak failed to make sure that Equitativa or its staff disclosed crucial information relevant to the recoverability of the asset to Emirates REIT's external auditors during the evaluation of the 2018 half-year financial statements. In his role as CFO, Ishak overlooked this responsibility.
This breach of duty resulted in a violation of Principle 2 of the DFSA's 'Principles for Authorized Individuals', which mandates that individuals act with due skill, care, and diligence in their roles as finance officers at their respective organizations.
The Critical Role of CFOs in Ensuring Financial Accuracy
Ian Johnston, the CEO of the DFSA, emphasized the critical role of CFOs in ensuring the fairness and accuracy of financial statements and related public announcements. CFOs are responsible for providing all relevant facts to external auditors transparently and comprehensively, which is vital for maintaining the integrity of financial markets and investor trust.