The Institute of Chartered Accountants of India (ICAI) will likely review books of IndusInd Bank, taking suo motu cognisance of accounting discrepancies disclosed by the private lender this week in its forex derivative portfolio, ICAI president Charanjot Singh Nanda told ET.
"As a proactive measure, the Financial Reporting Review Board (FRRB) of the ICAI can review the relevant financial statements of IndusInd Bank," said Nanda. He added that if the FRRB finds the bank's financial statements are not "true and fair" as per the stipulated standards, it can refer the case to ICAI's disciplinary committee for subsequent action against the auditors concerned.
IndusInd Bank said on Monday the discrepancies could have an adverse impact of around 2.35% on its net worth as of December 2024. The deficiencies are estimated to have a financial impact of nearly Rs 1,600 crore post-tax and about Rs 2,100 crore pre-tax on the bank.
The lender, during an internal review of processes relating to other assets and liability accounts of the derivative portfolio, found discrepancies in its derivative portfolio linked to transactions over seven to eight years through FY24.
On Tuesday, IndusInd Bank sought to allay concerns about the accounting discrepancy, saying it has enough reserves and capital to cover for it. However, the stock has plunged about 30% since the disclosure amid investor worries.
On Thursday, the stock fell 1.84% to Rs 672.1 apiece on the BSE, underperforming a 0.27% decline in the benchmark Sensex.
The FRRB was constituted in 2002. It aims to bring improvements in financial reporting practices and promote investor confidence in audited financial statements. The board essentially reviews compliance with generally-accepted accounting principles in the preparation of financial statements. It also scrutinises compliance with disclosure requirements and reporting obligations of Auditors.
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