Deloitte, KPMG charged with helping I-FIN cook its books

NEW DELHI: The

Serious Fraud Investigation Office

(SFIO) has charged accounting companies

Deloitte

and BSR and Associates (part of the KMPG network), along with some of its partners, as well as members of the audit committee, for their failure in not disclosing true financials of IL&FS Financial Services (I-FIN) and allegedly conniving with the management to suppress information.


In a chargesheet filed in a Mumbai court, the auditors face multiple allegations — from not bringing out facts related to negative capital adequacy ratio (CRAR), suppression of nonperforming assets and its provisioning and failure to get the company to write off loans. “This has led auditor, conniving, colluding with coterie to conceal material information/ facts, and in fraudulently falsifying the books of accounts and thereby the financial statements from FY 2013-14 to FY 2017-18, the auditor knowingly did not report the true state of affairs of the company, particularly negative net owned funds and negative CRAR...,” the document filed in court last week said. Audit committee members S S Kohli, Subhalakshmi Pense (both former bank chiefs) and Arun Saha have also been named in the chargesheet.

After pointing to several other lapses, including violations of the accounting standards, it elaborated on the negative CRAR, accusing I-FIN of working on its own policy instead of following RBI norms, which was not captured in the financial statements. It specifically pointed to loans to realtor Parasvnath, Grevek Investment & Finance and SKIL Infrastrcture, which was used to repay earlier loan.

While accusing the auditors of suppressing information, the chargesheet said: “The statutory auditors are independent from the management of the company and are employed by the shareholders and not by the directors. However, in case in hand the statutory auditors also failed to discharge their duties and knowingly signed false statements.” Deloitte refused to answer a detailed questionnaire. BSR & Co said: “We transitioned into the audit of IFIN as joint auditors only recently in FY18. We were 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.”