Brightcom Group's statutory auditors have resigned citing various reasons including "lack of required information" and "inadequate cooperation" from the company.
Through a letter dated August 6, the auditors DP Sarda & Co tendered their resignation, which was submitted by the company a day later through an exchange filing. The company also informed that it has appointed a new statutory auditor M/s Pradeep & Pradeep.
The resignation letter said that the action was prompted by several significant issues and listed lack of required information, inadequate cooperation in providing essential information, absence of shareholder approval for appointment of auditors, and delay in quarterly reviews.
Also read: Brightcom: Analysis of financial statements before SEBI order reveals several governance lapses
The letter said, "We were not provided with necessary information and documentation to complete our client evaluation and review under the client acceptance section of the Standards on Quality Control (SQC) issued by the Institute of Chartered Accountants of India (ICAI). The management has not supplied adequate information and records, and we were not given sufficient time to address these issues. This has significantly impeded our ability to asses the client's acceptance and carry out our audit responsibilities effectively."
It further stated that "the lack of cooperation from the cCompany in providing essential documentation and information has impeded our ability to carry out our audit responsibilities effectively. This situation has compromised our ability to meet both professional statutory obligations".
Also, it was brought to their attention that the appointment of an auditor needs to be approved by the shareholders at a general meeting within three months. However, according to the letter, this approval was been obtained, thereby placing their position as auditors in a state of uncertainty. "We are concerned about whether we have properly assumed the office of the auditor and whether our appointment complies with the legal requirement," the letter stated.
It added, "The company has not even filed ADT-1, with MCA for which the time is already over." This form informs the Registrar of Companies about the appointment of an auditor.
On the delay in quarterly reviews, the letter said that they were delayed "significantly" beyond the required 45-day period. This, the auditors said, impacted their ability to complete the reviews within the prescribed timeframe.
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