Unthinkable has happened - Auditors Withdraw audit report after circulation
The almost unthinkable has happened , just a day before the AGM, Deloitte Haskins & Sells, the auditors of Financial Technologies has withdrawn its audit report for fiscal 2012-13. These results had been released on 30th May and also dispatched to the shareholders.
The auditor citing crises in NSEL held the accounts as unreliable withdrew its report.
This may have been due to the fact that NSEL’s auditor, Mukesh P Shah & Co, has also withdrawn its audit report.
The issue - NSEL, promoted by FTIL, has to settle some 6,000 Crs dues to 148 members/brokers, representing 13,000 investor clients, after its trade was suspended on July 31 by government orders. Investigations have revealed related insiders, missing stocks, frauds & other misuse.
The institute of Chartered Accountants (ICAI) has launched an investigation into the matter which basically means assessing the auditors, their procedures, gaps, overlooking & any related ultra vires etc.
Is it enough ?? remember Satyam - nothing real happened then , hope this time they haul these guys over hot coals.
This raises few pertinent questions –
- are the auditor reports reliable
- Tenure & fees of auditors
- Can the auditors hide behind sample checks
Reliability appears very low & you need to do your own due diligence.
As the public probity increases , the agencies confront white collar crime more often, the role of auditors, validity of their reports have come into question time & again.
Long Tenures , Proximity often comes to play whether its a deliberate issue or sheer over confidence, then Satyam happens !
A sudden jump in auditor fees is another big give away !
Ever greening of loans ( happily used by banks) or amending Accounting standards of ICAI to help companies overcome prudence and capitalise interest costs - Power Projects, point to Govt's debatable example setting.
Solution - Honest & sufficient oversight either by an ICAI wing or some other statutory body, which should look for such interesting variations, ask relevant questions and also red flag Org & Auditors for immediate future.
Severely punishment for the guilty partners & the firms too.
The statement of FTIL on the Auditors' act and other relevant issues is attached for perusal
