ICAI to check auditors role in PMC mess

New Delhi, Oct. 2: Chartered accountants’ apex body ICAI has sought information from the RBI and other authorities on the PMC Bank crisis to check if any auditor was involved in the financial irregularities after Joy Thomas, the co-operative bank’s suspended managing director, blamed the auditors for "superficially auditing" the lender’s books due to "time constraints".

The Institute of Chartered Accountants of India on Wednesday said it has triggered its disciplinary mechanism and has written to the vigilance department of the Reserve Bank of India and the Commissioner of Maharashtra Co-operative Societies. In a statement, the institute said it has sought details of their findings as well as that of any "member/firm alleged to be involved in the matter.

Information has also been sought from the statutory auditor of the bank "pertaining to financial years 2017-18 and 2018-19", it added.

Thomas has, in a fivepage letter to the RBI on September 21, confessed to the role of the top management, including a few board members, in hiding the actual NPA numbers and also the actual exposure to the bankrupt HDIL, which is stated to be around Rs 6,500 crore or over 73 per cent of its total loan book of Rs 8,880 crore.

While Thomas has not named any auditor in the letter, two days before the regulatory clamp down, according to its annual report for FY19, the bank had three auditors -Lakdawal & Co (FY19 and FY18), Ashok Jayesh & Associates Associates (FY17, FY15, and FY11) and DB Ketkar & Co (FY14 and FY12)---since FY11.

The shallow auditing of the books of PMC by its statutory auditors was done as the 'bank was growing', Thomas claimed. His letter is part of the first information report (FIR) filed by the Economic Offence Wing of the Mumbai Police on Monday. "Since the bank was growing the statutory auditors, due to their time constraints, were checking only the incremental advances and not the entire operations in all the accounts," Thomas claimed.

"The statutory auditors validated the incremental loans and advances and scrutinised the accounts which were shown to them by the bank," the letter added. Thomas confirmed that the exposure to HDIL Group remained standard.

—Agencies Thomas blamed auditors for "superficially auditing" the lender’s books due to "time constraints"