NEW DELHI/MUMBAI: Troubles for auditors of beleaguered Infrastructure Leasing & Financial Services Ltd (IL&FS) are likely to increase, as the Ministry of Corporate Affairs has taken serious note of irregularities in the company’s account books, which are being probed by the Serious Frauds Investigation Office (SFIO).
The agency on Wednesday questioned Udayan Sen, former top executive of Deliotte, after a whistle-blower had early this month flagged the role of auditors. Other top accountants may also be called for questioning, say sources. IL&FS had three auditors — Deloitte, Ernst & Young affiliate SRBC and KPMG affiliate BSR.
SFIO, which is probing irregularities in the financials of IL&FS, has already questioned the role of auditors in its investigation report submitted to the ministry on December 3 last year, and said that the auditors “window-dressed financials”.
Even Institute of Chartered Accountants of India, which was assisting SFIO in the probe, had also flagged the role of auditors. ICAI, in its interim report had stated that statutory auditors of IL&FS acted in a “negligent and fraudulent manner” and prepared incorrect financial statements of the debt-laden group.
It was then that the Centre sought NCLT nod to reopen books of accounts of IL&FS, IL&FS Transportation Network Ltd (ITNL) and IL&FS Financial Services (IFIN) on the recommendation of the Institution of Chartered Accountants of India, and sought permission to initiate proceedings against the three auditors.
Sanjay Shorey, director, legal prosecution, MCA, said in a petition that the ministry was looking to reopen the accounts for last five years. He had said that the reopening will take about 30 days and the ministry has sought three months to perform the required tasks.
Notices were already sent to the SEBI, IT department and other statutory bodies.
While Deloitte Haskin and Sells LLP was involved in the audit of IL&FS and ITNL, BSR and Associates LLP was responsible for audit of IFIN, and SRBC & Co LLP was responsible for audit of ITNL and IL&FS. Deloitte Haskins was statutory auditor of IL&FS till FY2017 and of IFIN from FY2016 to 2018. SRBC was statutory auditor of IL&FS for FY17-18 and for ITNL from FY2016 to 2018. BSR was statutory auditor for IFIN from FY2016 to 2018. BSR also audited accounts of ITNL from FY2016 to 2018.
The three auditors
Deloitte Haskins & Sells was statutory auditor of IL&FS till FY17 and of IFIN from FY16-18
EY affiliate SRBC was statutory auditor of IL&FS for FY18 and for ITNL from FY16-18
KPMG affiliate BSR was statutory auditor for IFIN from FY16-18. BSR also audited accounts of ITNL from FY16-18