Ernst and Young 'fully stands by' Damas audit report

Dubai Financial Services Authority orders Damas to replace firm as auditor.

The Dubai Financial Services Authority (DFSA) yesterday ordered Damas International to replace Ernst and Young as its external auditor. In addition to replacing the board of directors, including the Abdullah brothers, Damas agreed to "substitute its external auditor with another auditor acceptable to the board and the DFSA", the regulator said.

Ernst and Young said that its last audit of financial statements for the period ending March 31 2009 "appropriately disclosed all amounts owed by the Abdullah Brothers to the extent that they were outstanding at the balance sheet date". "We fully stand by our audit report on the financial statements of Damas International Limited for the period ended 31 March 2009," the company said. "We have noted that the DFSA has agreed with Damas International Limited to change external auditors in the 'Enforceable Undertaking' document issued today [yesterday]. No reason is given for the change in auditor or the requirement for rotation. Having not been directly informed by the DFSA of this decision, or had any other discussions with them on their findings, we are not in a position to comment on that matter."

Paul Koster, the chief executive of the DFSA, declined to say why the authority directed that the external auditor be replaced.