Audit Regulator Probing Role Of Auditors Of Reliance Capital, Reliance Home Finance
The National Financial Reporting Authority is probing the role of auditors of Reliance Capital and Reliance Home Finance.
The National Financial Reporting Authority is probing the role of auditors of Reliance Capital Ltd. and its subsidiary Reliance Home Finance Ltd. after irregularities were pointed out by the companies’ statutory auditor—Price Waterhouse & Co Chartered Accountants LLP, according to a senior government official.
The audit regulator has sought audit files of the two Reliance Anil Dhirubhai Ambani Group firms, and information on audit and non-audit revenue, the official said on condition of anonymity.
Price Waterhouse & Co and Pathak H.D. & Associates were the two auditors of the Anil Ambani group firms.
Price Waterhouse & Co, which was appointed in 2017, resigned in June 2019—three years before their terms ended—as one of the statutory auditors of Reliance Capital Ltd. and Reliance Home Finance Ltd. citing certain “observations or transactions” in its assessment.
Before resigning, Price Waterhouse & Co wrote to the two companies under a legal provision that pertains to fraud. The Reliance Group companies, however, have denied the auditor’s claims.
Price Waterhouse & Co did not respond to a request seeking a comment, and Pathak H.D. & Associates could not be reached for a comment.
After Price Waterhouse & Co invoked a fraud-related provision in company law in its resignation letters, it shared its report with the Registrar of Companies.
A probe has been initiated by a regional director of the RoC against Reliance Home Finance and Reliance Capital for suspicious transactions. Under Section 209A of the Companies Act, a regional director’s office has an inspection unit for investigating the books of accounts of companies.
The Securities and Exchange Board of India is also looking into Price Waterhouse & Co’s resignation as statutory auditor of Reliance Capital and Reliance Home Finance, PTI had earlier reported.
The audit firm—which currently isn’t a statutory auditor to any other Anil Ambani-led group company—said the firms failed to convene audit committee meetings within the expected time, preventing it from performing its duties and exercising independent judgement in preparing reports to members of the companies.
In January, Reliance Commercial Finance Ltd., another subsidiary of Reliance Capital, and Reliance Home Finance said that a forensic audit undertaken by Grant Thornton found no adverse findings for any fraud, embezzlement or diversion of funds by the two companies. The scope of the forensic audit included diversion, siphoning of funds, embezzlement, malafide operations, falsification of accounts, fraudulent transactions and detection of frauds by company or its promoters, employees or associates.
An email sent to Reliance Anil Dhirubhai Ambani Group remained unanswered.