Manpasand to Vakrangee, spate of auditor exits in top listed companies now under govt scanner

The Minister of State for Corporate Affairs P P Chaudhary has called a meeting today to review the recent spate of exits by auditors of prominent listed companies. At least 15 listed companies have come under the scanner of the government after their auditors resigned, complaining about the functioning of the firms. The meeting has been called with Institute of Chartered Accountants of India (ICAI), the regulatory body of CAs, along with Institute of Company Secretaries of India (ICSI) and Institute of Cost Accountants of India to take stock of the situation, sources said.

After questions were raised about the role of the auditors in Nirav Modi bank fraud case of about Rs 13,500 crore, auditors of about 15 prominent companies turned wary and wrote to the Ministry of Corporate Affairs (MCA) apprising it of the lack of full disclosures among other issues.

“Under section 143 (12) of the Companies Act, 2013, we have got 15 odd complaints. And we have instituted investigations, inquiries and whatever we need to do,” said a senior official of the ministry.

Auditors are required to report to the government in case they suspect any wrongdoing in the company, as per section 143(12) of the Companies Act.

The ministry is inquiring about the details of the complaints from auditors. “The auditors are being questioned. We have asked them to give full reasons and tell us in detail (the reason for exit). What they have said so far is not enough,” he said.

“Wherever the conduct of the auditor is not clear and they have not given clear answers, we give them polite letter first to seek information,” he added. “The government has enough powers under the Act to take action, including prosecution for imprisonment, in such cases,” said the secretary.

As many as 32 auditors have resigned during January-May period, 15 of them in the past one month.
Many of them have conveyed their concerns to the ministry.

These include complaints related to fraud and public interest, sources said. Some of them have resigned on personal grounds also, sources added.

Recently, the auditor of Manpasand Beverages, Deloitte Haskins and Sells, resigned saying that the company did not provide significant information sought by it.

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Before that Price Waterhouse & Co had quit as auditor of Vakrangee due to lack of information about its business and from Atlanta citing non-disclosures about significant observations by tax authorities.
It also resigned from Edelweiss Financial Services on mutual terms.

By Anjul Tomar, DNA