VIJAYAWADA: In a major development in the probe into the alleged Margadarsi Chit Fund Pvt Ltd (MCFPL) scam, the APCID arrested a chartered accountant for allegedly ‘abandoning due diligence and due process’ in certifying the annual financial statements of MCFPL.
The accused Kudaravalli Shravan was sent to 14-day judicial remand on Thursday. According to APCID chief N Sanjay, it was also found that principles of auditing were conveniently ignored at various levels by Shravan, especially when it comes to financial statements of bank balances—both current and fixed deposits.
‘CA certified firm’s annual statements sans checks’
“The auditor could not confirm balances in banks. Confronted with the confirmations obtained from banks by CID, the auditor could not explain the balances of fixed deposits shown on the balance sheet inflated by a few hundred of crores,’’ Sanjay said.
“Shravan confessed to certifying the annual financial statements of MCFPL by not following the due process of verification of the branch-level financial statements or bank statements,” he added. “This casts a shadow on the annual reports, including the cash reserves, submitted by MCFPL to the Registrar of Chits,” the CID alleged.
Police also seized Shravan’s laptop and a volume of records from his possession. The 44-year-old accused is the official partner in Brahmayya & Co chartered accountancy firm, the CID said. It may be recalled that CID had registered seven FIRs under sections 120(B) (criminal conspiracy), 409 (criminal breach of trust), 420 (cheating) and 477(A) read with 34 (falsification of accounts) of IPC, Section 5 of Andhra Pradesh Protection of Depositors in Financial Establishments Act, 1999 and Section 76, 79 of Chit Funds Act,1982 based on complaints received from assistant registrars of various districts.
The CID found that MCFPL committed various financial irregularities such as non-payment of monthly subscriptions, diversion of funds to mutual funds, depositing future subscription amount to a second bank account, which is a violation of section 22 of the Chit Funds Act and non-disclosure of revenue and expenditure account and statement of assets and liabilities and details of investment as per rule 28 (read with Section 24 of the Chit Fund Act).