Mumbai: Troubled Infrastructure Leasing & Financial Services (IL&FS) is seeking to appoint an auditor to look into its books for the last five years, said people with direct knowledge of the matter.
The role of EY, Deloitte and KPMG — that audited the group and its subsidiaries through their Indian affiliates, SR Batliboi & Co, Deloitte Haskins & Sells, and BSR & Company, respectively— would be scrutinised, they said.
“In a meeting held on Thursday, it was decided that the last five years’ audited accounts be recast and reopened,” said one person cited above. “While there is only one auditor who is not conflicted, it was decided the ministry of corporate affairs should take a final call in this regard.” The new auditor would be required to submit a report within three months, the person said.
IL&FS insiders said only two major firms were being considered for the job, considering that the Big Four—EY, PwC, Deloitte and KPMG—have conflict of interest in one way or another. “Grant Thornton and BDO India were the only two firms that were being considered,” said a person close to the development. “However, even Grant Thornton is almost finalised for forensic investigations in IL&FS, so only one player now remains.”
IL&FS spokesperson Sharad Goel refused to comment on the story.
IL&FS‘ decision to appoint another auditor is in line with National Company Law Tribunal’s (NCLT) ruling.Reopening of books could also pose questions to auditors, insiders said. “If the new auditor discovers IL&FS, its subsidiaries or past senior executives manipulated or provided wrong figures (to statutory auditors), the option to withdraw earlier-given opinions is on the table,” said a person close to the three auditors. As of now, none of the three auditors have withdrawn their opinions. “It’s not that the option (to withdraw the opinion) wasn’t discussed internally, but for now, no facts have come to light where we can confidently say figures were manipulated,” the person said.
The Serious Fraud Investigation Office had alleged a “serious mismatch between the assets and liabilities” in the books of IL&FS. There were definitely liquidity concerns for the IL&FS group, but none of that was reflected in the balance sheet, it had said.
The Institute of Chartered Accounts of India, in its interim report, alleged that the auditors acted in a “negligent and fraudulent manner” and prepared incorrect financial statements of IL&FS and its group companies.
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