The auditor to Anil Ambani firm Reliance Capital says it wasn't allowed to do its job
- PriceWaterhouseCoopers resigned as Reliance Capital and Reliance Home Finance’s auditor effective on June 11.
- PwC said the company prevented it from exercising independent judgment.
- PwC noted some observations and transactions and did not receive satisfactory response to queries.
Top accounting firm PriceWaterhouseCoopers (PwC) resigned as Reliance Capital and Reliance Home Finance’s auditor effective on June 11. In a letter, PwC said that the company prevented it from performing its duties as statutory auditors.
The stock of Reliance Capital fell as much as 7% in early trade on Tuesday (June 12) before recovering.
As per a letter by PwC which was a part of BSE filing by Reliance Capital, the company prevented it from exercising independent judgment in making a report to the members of the company. “And impaired its independence and hence it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign,” the letter said.
The dispute started when PwC noted some observations and transactions which in its assessment if not resolved satisfactorily might be significant or material to the financial statements. And, that it did not receive satisfactory response to its queries.
The Anil Dhirubhai Ambani Group company also did not convene an audit committee meeting within the expected time, PWC said in a letter. Instead, it said that it will initiate legal proceedings against the firm.
“PWC’s observations are completely baseless and unjustified. PWC has acted prematurely without even statutory discussions with the Audit Committee. There is no question of ‘diversion’; zero loans and / or liquidity have been provided by any lender in the PWC audit period,” Reliance Capital said in a statement on June 13.
“Reliance Capital is by law required to fund only group entities, being a Core Investment Company (CIC). All resources have been utilised purely to support group debt servicing of Rs 35,000 crore in past 14 months,” the statement said.
The other auditor Pathak H D A Associates will continue as the sole statutory auditor.
This comes after a confidence-building conference call by Anil Ambani, the chairman of the ADA group on June 11. He had claimed to service all the group’s debt obligations and spoke about how he was ‘personally anguished’ by rumour mongering which has hammered his group companies’ stock.
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