PFS independent auditor declines to give opinion on results

BL New Delhi Bureau | | Updated on: May 27, 2022
The independent auditor was hired to review the statement of unaudited standalone financial results of PFS

The independent auditor was hired to review the statement of unaudited standalone financial results of PFS

Absence of forensic report among other regulatory issues cited as reason

The independent auditor of PTC India Financial Services (PFS) has expressed inability to offer any opinion on the crisis-ridden company’s financial results for the October-December quarter of FY22 as well as for the April-December period of the last fiscal.

“Pending completion of the forensic audit, our review of conclusion of Risk Management Committee (RMC’s) report by the Holding Company (PTC India), status of other enquiries with the regulators, and management’s assessment thereon, and considering the position taken by the Audit Committee as explained above, we are unable to determine the potential impact on the standalone unaudited financial results for the quarter ended December 31, 2021, and year-to-date results for the period from April 1, 2021 to December 31, 2021,” the auditor MSKA & Associates said in his report submitted to the stock exchanges by PFS on Friday.

The independent auditor was hired to review the statement of unaudited standalone financial results of PFS. The statement is the responsibility of the company’s management and has been approved by the Board of Directors, the auditor added.

Resignation of directors

The issue relates to resignation of all the independent directors (including chairman of audit committee) of PFS on January 19, 2022 mentioning in their resignation letters about serious lapses of governance and compliance, including but not limited to, non-sharing or delayed sharing of information with the board by the management, suppressing the facts by the management with the board and unilateral change in terms of loan agreements compared to terms sanctioned/ approved by the board.

“The company, basis directions of the audit committee, is in the process of appointing an independent firm to undertake a forensic audit in relation to the allegations raised by ex-independent directors of the company, including but not limited to review of company’s response/ Action Taken Report (ATR) submitted by the company to SEBI, RBI and RoC during January 2022 to April, 2022, pursuant to their queries arising from resignation of such ex-independent directors, to identify additional instances, if any, relating to such allegations and its consequential impact on the financial reporting and internal financial controls over financial reporting of the company,” MSKA & Associates said.

While PFS issued a letter of intent to an independent firm on May 26, 2022, the engagement letter with final scope is not yet executed, it added.

The auditor was informed that SEBI directed PTC India (holding company) on January 24, 2022 to examine allegations and come- up with its conclusion. On January 27, 2022, PTC India informed SEBI that its Board has re-constituted its RMC to examine the allegations and submit its report to PTC India’s Board. On May 13, 2022, SEBI also directed the PFS to not change the structure and composition of its Board, till the completion of forensic audit by the independent firm and submission of RMC’s report by the holding company.

“We have also been informed that RMC submitted it’s report to the holding company’s Board on May 23, 2022 and the holding company’s Board would review and submit its conclusion to SEBI. We have also been informed that RMC’s report is not made available to the company (PFS), including its audit committee and the Board, as it is under review by the holding company’s Board and therefore, it was not available to us for our review,” the auditor explained.

The auditor revealed that in the adjourned audit committee meeting held on May 26, 2022, they were informed by PFS, through email dated May 27, 2022 and the Chairman of Audit Committee through his email dated May 26, 2022 that the audit committee reviewed the statement but did not adopt or recommend the same for Board’s approval and submitted the same to the Board for their further consideration.

“Further, we have been informed by the company vide its email dated May 27, 2022 including email from Chairman of the Board, the Board of directors, after taking into consideration the overall position, approved the results,” the auditor added.

Published on May 27, 2022
  1. Comments will be moderated by The Hindu editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like

Recommended for you