Commodities

PwC preparing second audit report on MCX

Suresh P Iyengar Mumbai | Updated on November 24, 2017

Report may cover transactions between MCX and India Bullion Market Association





PricewaterhouseCoopers (PwC), which was mandated to do the forensic audit on Multi Commodity Exchange, is expected to submit its second report soon.

The first report, which was submitted last month, went into the financial details of the exchange since its inception in 2003 and highlighted major discrepancies.

The commodity market regulator Forward Markets Commission had ordered for the audit on the exchange after National Spot Exchange, part of MCX group, defaulted on trade settlement worth ₹5,600 crore.

“The terms of reference provided for the PwC audit was comprehensive and it has covered only a few points in the first report,” said a highly placed source who did not want to be identified.

It is learnt that there may be one or two more reports from PwC.

The second report may broadly cover the aspect of risk management followed by the exchange and financial transactions between MCX and the Indian Bullion Market Association, the subsidiary of scam-hit National Spot Exchange.

The terms of reference for PwC audit also requires it to go through the minutes of the board meeting and find out whether it was conducted as per the norms laid out by FMC, besides the role of different committees formed by exchange to take major decisions.

The first report dealt with related party transactions which includes that of Financial Technologies and National Bulk Handling Corporation, the warehousing subsidiary of MCX. Besides, the audit firm also looked into the expenses of over ₹25 lakh incurred by the exchange.

In a most damaging report, PwC has revealed that the exchange entered into transactions worth over ₹100 crore with a non-existent entity, it was reliably learnt.

When contacted, MCX refused to comment.

FMC has forwarded the copy of the PwC report to the MCX board for its response and taking corrective measures. The directors forwarded the report to the audit committee for deliberation before responding to the regulator.

FMC instructed the exchange to submit an action taken report on the PwC findings. MCX has claimed that the audit committee has asked for some additional inputs from PwC.

Published on March 12, 2014

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