Callmate removes AF Ferguson as auditors

Callmate Telips Telecom Ltd, a leading payphone company, has removed A F Ferguson and Co as external auditors for professional negligence resulting in huge losses to Callmate and its shareholders.

As direct consequence of A F Ferguson’s negligent and deliberate breach of its obligations, Callmate’s market capitalisation has evaporated by more than 50 percent despite the company’s profitability and operations remaining stable.

Callmate’s plan to have its scrip listed in Dubai got aborted and its share has taken a more than 50 percent fall, with the scrip reputation having become the joke of the stock market, says the legal notice served to Ferguson.

Sources said that the rift between Callmate and Ferguson surfaced when the auditors declined to book the revenues on the basis of sale of cards, without having to wait for usage of these cards.

It is a common practice world-wide and in Pakistan that the revenues are booked on the basis of sale of prepaid cards and not on their usage, as according to a survey, 25 percent of the prepaid cards are never used.

Sources said that A F Ferguson had been allowing Callmate to book its revenues on the basis of sale of cards and not usage for the last four years, and changed the policy without any prior announcement in this regard.

“This practice of A F Ferguson has severely damaged Callmate and its scrip repute in the stock market and the company has sustained huge losses. We suspect that the external auditors have been involved in share trading, or something,” remarked sources in Callmate.

According to details, A F Ferguson failed to meet all time lines for deliverables agreed upon between the company and the external auditors. According to agreement, the auditors had to deliver the company’s initialled accounts with audit clearance letter by August 28, 2006, the time line, which could not be met.

Later, in a meeting, the auditors committed to deliver the accounts by September 4, and the Company announced the holding of board meeting for September 12, and circulated the same in the KSE.

“But, A F Ferguson, acting completely unprofessionally disregarded company’s (Callmate) repute and the interest of shareholders,” noted a notice by Callmate to Ferguson.

The board meeting, held on September 12, could only be able to forward management accounts to KSE, throwing the shareholders into confusion as to exactly what was going on, added the notice.

A notice issued by Callmate said, “As a result of non-submission of audited financial statements by the auditor of the company A F Ferguson & Co Chartered Accountants and the fact that despite making all the efforts to resolve the difference pertaining to the revenue recognition policy, the Company has no option other than to seek removal of the auditors through a special resolution to be passed at an extraordinary general meeting of shareholders.”

One senior management personnel of Callmate said that the company was planning to file a suit for compensation against A F Ferguson, which is a known audit firm in the country, and a senior partner of Ferguson, Shabbar Zaidi, has also been the president of ICAP.

Source: Business Recorder