Grana y Montero auditor says it did not maintain internal controls in FY15-FY16
Grana y Montero auditor Moore Stephens states: "We have audited the accompanying consolidated statements of financial position of Grana y Montero S.A.A. and its subsidiaries as of December 31, 2015 and 2016, the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each of the years then ended, and the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the company as of December 31, 2015 and 2016, and the results of their operations and their cash flows for each of the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, the company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2015 and 2016, based on criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission because the following material weaknesses in internal control over financial reporting existed as of those dates: Lack of a formally established and documented process for enterprise and fraud risk management; Deficiencies in the design and operational effectiveness of controls over segregation of duties to help ensure that personnel with potential conflicts were not involved in incompatible activities; Deficiencies in the design and operational effectiveness of the controls established in the accounting closing process with respect to the review of the consolidated and separate financial statements, including controls over the review, approval and documentation related to journal entries; Deficiencies in the design and operational effectiveness of controls established with respect to the recognition of revenue and determination of related estimates, including construction contract revenues and contingent revenues, and the accounting for inventory; Deficiencies in the design of controls over the timely accounting for signed contracts; Deficiencies in design and operational effectiveness of the controls over the review and approval of the valuation of acquired assets and liabilities as part of a step acquisition; Lack of adequate supervision, monitoring and follow-up by the Audit Committee regarding the role of the Internal Audit Department; Deficiencies in operational effectiveness of controls over SOX compliance."