Highlights
- Deloitte Haskins and Sells has been under the radar over its role in the IL&FS audit process, and are likely to be banned for 5 years
- The Ministry of Corporate Affairs may consider to invoke section 140 (5) of the Companies Act to debar the company
- Deloitte asserted that the group’s defaults started in May 2018.
- Deloitte audited IL&FS, ITNL along with SRBC&Co (E&Y) and IFIN by its own, in 2016-17
Deloitte Haskins and Sells has been under the radar over its questionable approach towards the role in the IL&FS audit process, and are likely to be banned for 5 years by the government.
Apparently, the Ministry of Corporate Affairs may consider to invoke section 140 (5) of the Companies Act to debar the company for alleged malpractice in IL&FS accounts. This severe action is being warranted after Deloittes alleged violation in conduct in the IL&FS case.
This Section essentially looks at the following:
(5) Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo motu or on an application made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or indirectly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company to change its auditors.
There are high circumstances of second such situation to occur after Price Waterhouse (PW) was grilled in the Satyam scam.
2 PW partners were also prohibited and banned for 3 years. The regulator inflicted a disgorgement (a situation in which a person or organization is forced to pay back money that they have made in an illegal way) of INR 914 crore on Price Waterhouse and 2 of its chartered accountants – S Gopalakrishnan and Srinivas Talluri.
The 3 entities also had to pay 12% interest on the disgorgement amount since January 7, 2009, within 45 days from the date of the order. Further notice was issued that no listed companies or intermediary registered with SEBI to be involved with any of the audit firm associated with PW. These entities were charged under SEBI prohibition of Fraudulent and Unfair Trade Practices (FUTP) regulation.
A Deloitte spokesperson told IANS “The investigations on the company IFIN are in progress and we are cooperating fully. We reaffirm that we have conducted our audits in accordance with the Standards on Auditing and applicable laws and regulations.”
Deloitte asserted that the group’s defaults started in May 2018. The principal arms of IL&FS Group – IL&FS, ITNL and IFIN within Deloitte saw SRBC&CO (E&Y) audit 2 of the firms in 2017-18 and 2018-19, namely IL&FS and ITNL. IFIN was audited by BSR (KPMG) in 2018-19 DHS (Deloitte) and BSR (KPMG).
Deloitte audited IL&FS, ITNL along with SRBC&Co (E&Y) and IFIN by its own, in 2016-17.
Trying to keep at a safe distance from opaque architecture of the 347 subsidiaries – Deloitte has elucidated that they were being audited by small firms. It has also been seen that during the several years Deloitte was auditing IL&FS Group, secured loans were sufficiently collateralized and was valued by reputable parties with the likes of Knight Frank or realty and NM Raiji.
In 2015-16, the assets and loans value was confirmed, Piramal Group made a proposal to acquire a stake in IL&FS at INR 750 per share after a due diligence exercise by KPMG.
Deloitte claimed that they failed to audit the financial statements of 111 subsidiaries, 36 jointly controlled entities, 11 associates in 2016-17, or the financial information of 13 subsidiaries, 2 jointly controlled entities or 6 associates. This is where the scam took control of it.
Visit InstaFinancials and reach out to us. We provide Financial Insights of all companies in India along with providing financial reports and crucial public documents of any company in India. Visit our blog https://atomic-temporary-153329470.wpcomstaging.com/to get the latest updates and news on the Indian Corporate.
For any queries contact our Customer Care – +91 7879776776.
#KnowYourCompany #KnowYourCompetitor #KnowYourCustomer
Important Link: