LONDON – Britain’s accounting regulator said it has opened an investigation into EY’s audit of NMC Health, the troubled hospital operator that was placed into administration in April.
Shares in NMC were suspended on the London Stock Exchange after the company revised its debt position to $6.6 billion, well above earlier estimates.
“On 15 April 2020 the Financial Reporting Council opened an investigation into the audit by Ernst and Young LLP of the financial statements of NMC Health for the year ended 31 December 2018,” the FRC said in a statement on Monday.
EY said it has been notified of the FRC’s intention to conduct an investigation into the audit of NMC Health plc.
“We will be fully cooperating with the FRC during their enquiries. It would be inappropriate to comment further at this time,” EY said in a statement.
One of the company’s biggest lenders, Abu Dhabi Commercial Bank (ADCB.AD), has said it has begun criminal proceedings in Abu Dhabi against an unspecified number of individuals in relation to NMC.
NMC is the largest private healthcare provider in the UAE but came under scrutiny late last year when U.S.-based short-seller Muddy Waters criticised its financial statements.
The FRC has powers to fine and bar auditors it finds that have failed to comply with its standards.
The founder of NMC Health, BR Shetty, said on April 29 that a probe conducted by his own advisors has found alleged fraud at the firm and that he was working to clear his name.