BSR Co. LLP and Deloitte Haskins & Sells (DHS) LLP, member firm of Deloitte network had jointly audited the books of IL&FS Financial Services (IFIN), a subsidiary of Infrastructure Leasing & Financial Services Limited (IL&FS) for FY18.
“The partner was questioned in connection with IFIN. Since they had handled the account for FY-18 and up to June, 21, 2018, the audit partner was questioned on a range of issues like the loan granted to NPAs, loans granted despite negative credit rating and without sufficient collaterals,” said an official in the know who spoke on the condition of anonymity.
The crisis in IL&FS first came to light in July 2018, when its roads unit had difficulties making due repayments on bonds. Erstwhile IL&FS CMD Ravi Parthasarathy resigned on July 21, 2018.
The official added that since the probe in IFIN is now concentrating on the roles of the auditors engaged by the company, all the auditor concerned with IFIN books are being examined.
“Our firm remains committed to the highest standards of ethics and audit quality. We transitioned into the audit of IL&FS Financial Services as joint auditors only recently in FY 18. We are not the auditors for IL&FS or any other material subsidiary of IL&FS. We stand by our audit, which was performed in line with the applicable auditing standards and regulations, and are fully committed to cooperating with the regulatory authorities on their inquiries,” a KPMG spokesperson said when ET sought comments for this story.
On April 24, SFIO, the investigation arm of the corporate affairs ministry, had examined Udayan Sen, partner, Deloitte India, in connection with its probe. Sen was questioned in wake of the allegation levelled by a whistle blower that the firm had helped fudge accounts of IL&FS Financial Services (IFIN), a subsidiary of IL&FS.
In a three-page letter, submitted to the agency, the whistleblower had claimed that the audit and tax consultancy firm was aware of the factual situation on the financial mismanagement and impropriety at IL&FS. The complainant, claimed to be a senior member of the client team at Deloitte Haskins & Sells, alleged that the auditing firm had received several advisory works from the former board of IL&FS.
SFIO will be soon submitting its second report in the case. SFIO has made two arrests – Hari Sankaran, former VC, IL&FS and Ramesh Bawa, former MD & CEO, IFIN. Incidentally this is also the first set of arrests made by the agency in Mumbai.