Monday, 30th October 2017

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Move to bar IL&FS Fin auditors

Fresh application to debar Deloitte Haskins & Sells and BSR Associates from auditing for five years

By TT Bureau in Mumbai
  • Published 11.06.19, 1:01 AM
  • Updated 11.06.19, 1:01 AM
  • 2 mins read
IL&FS building, Mumbai (Source: IL&FS annual report)

The ministry of corporate affairs on Monday filed a fresh application with the National Company Law Tribunal (NCLT) to bar Deloitte Haskins & Sells and BSR Associates, who are the auditors to IL&FS Financial Services, from auditing for five years and to appoint a new auditor for the firm.

IL&FS Financial Services is one of the 348 subsidiaries of the IL&FS group, which owes more than Rs 95,000 crore to lenders. The group got into trouble after many of its subsidiaries began to default since last September. On October 1 2018, the government had suspended its board and taken over the company.

The ministry moved its applications through its senior counsel Sanjay Shorey. The ministry has also made Udayen Sen of Deloitte, and Kalpesh Mehta and Sampath Ganesh of BSR respondents as they were the signatories of the audit reports of the company.

Shorey said the ministry made Mehta and Ganesh the respondents as they as the auditors were required to certify the books of their clients and would have the knowledge of all financial information of the company but failed to or chose not to report.

Deloitte was the financial auditor for 2017-18, while BSR is still the auditor of the company. The ministry has also made the RBI, the Securities and Exchange Board of India and the Institute of Chartered Accountants respondents.

A two-member NCLT bench of VP Singh and Ravikumar Duraisamy asked the auditors to file their replies by June 19 and posted the matter for hearing on June 21.

A PTI report said a probe by the Serious Fraud Investigation Office (SFIO) of the ministry of corporate affairs allegedly revealed serious lapses at the level of auditors, the auditing committee and the then top brass of the group.

The auditors not only connived with the top management in their fraudulent activities but also sought to sell them certain products and services.

The SFIO chargesheet was recently admitted by the Mumbai Sessions court.

In the chargesheet, the SFIO has accused 30 entities and individuals of various violations and offences, including financial fraud.

The matter will be heard on June 18.

Meanwhile, IL&FS said that as part of the overall resolution process for the entire group, its new board has extended the last date of filing of claims, under a claim management process, to June 20.

IL&FS added that the extension was pursuant to an order passed by the National Company Law Appellate Tribunal (NCLAT) on May 29, wherein it had extended the period for the lenders to file their claims by June 20.

The new board had initiated a comprehensive claims management process for 70 group entities on May 22.

“The claims process is being run in an effort to crystallise the financial and operational liabilities of IL&FS Group to facilitate distribution of proceeds from the resolution process …Grant Thornton has been appointed as the claims management adviser,” IL&FS said.