Dubai: Former CFO Penalized with 122,000 Dirhams Fine for Misleading Financial Statements
In a decision published last Thursday, the Dubai Financial Services Authority (DFSA) indicated that a former CFO based in Dubai was fined 122,000 dirhams for breaches of financial reporting and for providing misleading public information.
The DFSA identified it was Remi Ishak, a former CFO of Equitativa and Emirates REIT — a publicly listed real estate investment trust (REIT) on Nasdaq Dubai, with a diversified portfolio of retail, commercial and educational properties.
In December 2021, the DFSA acted against Equitativa for issuing misleading statements about Emirates REIT, breaches of International Financial Reporting Standards (IFRS), and withholding information from external auditors.
The DFSA indicated that Ishak was implicated in those breaches. In 2018, while CFO, Ishak made public statements about a school property where the previous tenant had vacated with over 9 million dirhams in unpaid rent. He said that a new tenant would start operations in the upcoming academic year. At the time, however, there was no binding offer or contract, so his statements were misleading, contributing to the impression that asset value and revenue would not be impacted.
In addition, Ishak approved Emirates REIT’s 2018 half-yearly financials without an allowance for any unpaid rent or impairment to the value of the asset, both required under IFRS. The half-yearly financials falsely presented a school fully occupied and on an extended lease.
The DFSA found that Ishak neglected to ensure that Equitativa or Equitativa’s staff provided the external auditors information necessary to assess the collectability of the asset to external auditors in providing their view about the 2018 mid-yearly financials.
The DFSA stated that Ishak breached Principle 2 of the DFSA’s Principles for authorized Individuals, which requires professionals in finance to act with due skill, care and diligence.
CEO of the DFSA said CFOs had a critical role in ensuring financial disclosures were accurate about public and listed funds and whether CFOs work in the business, or a CFO advisory service, such as Equitativa, they have a responsibility for being fully transparent with external auditors as well preserving the integrity of the financial statements.
