Coffee Day board appoints EY for forensic audit

To get strategic advisor soon

The board of directors at Coffee Day Enterprises has appointed EY to scrutinise the books of accounts of the company along with its subsidiaries in the light of the purported letter written by the chain’s founder V G Siddhartha, who was found dead in mysterious circumstances last month. The company made the disclosure in a regulatory filing on Thursday after a board meeting.

The board has also decided to appoint a person of eminence or a reputed firm as its strategic corporate advisor for determining the strategic direction for the firm.

The Coffee Day founder had claimed that none of his team, auditors, senior management or the board was aware of his personal financial transactions. Although the veracity of the letter is under investigation, such claims had raised doubts on the existence of unknown financial transactions beyond the knowledge of the board. Industry experts said EY was likely to conduct a forensic audit to find out if there was any off-thebook transactions without the knowledge of the key management and auditors.

“EY is likely to look at the forensics of the book, because the board also needs to know the right picture. This is a positive sign,” said Shriram Subramanian, founder of corporate governance advisory firm InGovern. “Also, the decision to rope in a strategic advisor is timely because it can provide a direction. However, these are just initial steps and we have to wait for the outcome of the EY audit to form a view.”

Sources privy to the development said that EY was selected because it was the only audit firm among the big ones which had not acted as an auditor for Coffee Day Enterprises or its 45 subsidiaries.