IL&FS mess: CA In­sti­tute holds statu­tory au­di­tors ‘prima fa­cie guilty’

Finding sets stage for full-fledged in­ves­ti­ga­tion against au­dit firm partners

The Hindu Business Line - - FRONT PAGE - KR SRIVATS

The In­sti­tute of Char­tered Ac­coun­tants of In­dia (ICAI) has held cer­tain statu­tory au­di­tors of the be­lea­guered IL&FS Group, in­clud­ing its par­ent IL&FS Ltd and two of its sub­sidiaries IL&FS Trans­porta­tion Net­works Ltd (ITNL) and IL&FS Fi­nan­cial Ser­vices Ltd (IFIN), “prima fa­cie guilty” pro­fes­sional mis­con­duct.

With this, the le­gal decks are now cleared for full-fledged in­ves­ti­ga­tions against those partners of the three top­notch In­dian au­dit firms re­spon­si­ble for the statu­tory au­dit of these com­pa­nies, sources said.

The ICAI is now un­der­stood to have sent a for­mal com­mu­ni­ca­tion to the partners con­cerned of the three firms — Deloitte, Hask­ins & Sells, BSR & As­so­ciates LLP and SR Batli­boi.

With­out get­ting into the de­tails, ICAI , in a writ­ten re­ply to Busi­nessLine, con­firmed that the statu­tory au­di­tors con­cerned of of IL&FS Ltd and two of its sub­sidiaries — IFIN and ITNL — have been held prima fa­cie guilty of pro­fes­sional mis­con­duct for the fi­nan­cial years 2016-17 and 2017-18.

In the case of par­ent and hold­ing com­pany IL&FS Ltd, the statu­tory au­di­tor for 2017-18 was SR Batli­boi.

For the fi­nan­cial year 2016-17, the statu­tory au­di­tor was Deloitte, Hask­ins & Sells.

In the case of ITNL, the statu­tory au­di­tor for 2017-18 was SR Batli­boi. For 2016-17, there was a joint au­dit by SR Batli­boi and Deloitte, Hask­ins & Sells.

In the case of IFIN, Deloitte, Hask­ins & Sells and BSR & Co were joint au­di­tors for 2017-18. Deloitte, Hask­ins & Sells was statu­tory au­di­tor of IFIN for 2016-17.

It may be re­called that the ICAI has been de­mand­ing pow­ers to pro­ceed against er­rant au­dit firms.

Cur­rently, dis­ci­plinary pro­ceed­ing can be ini­ti­ated only against the sign­ing partners or those re­spon­si­ble for the statu­tory au­dit work.

“The dis­ci­plinary ju­ris­dic­tion of the ICAI ex­tends to its mem­bers re­spon­si­ble for au­dit. The CA Act does not em­power the ICAI to pro­ceed against au­dit firms,” said Ashok Hal­dia, for­mer Sec­re­tary, ICAI.

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