CAG empanelled auditors to re-examine books of IL&FS, 2 subsidiaries

IL&FS Transportation Networks | The company defaulted on the interest on non-convertible debentures due on August 25, 2020. (Image: Reuters)

The Ministry of Corporate Affairs (MCA) is in discussion with the Comptroller and Auditor General (CAG) to appoint empanelled auditors to re-examine the book of accounts of IL&FS and two subsidiaries IFIN and ITNL. According to sources, MCA is the last stage of finalising the auditors.

Earlier in January, the Mumbai bench of National Company Law Tribunal (NCLT) ordered to reopen book of accounts of IL&FS and the two subsidiaries – from FY12-13 to FY17-18. The MCA wanted the accounts to be re-examined as it felt that auditors had allegedly “presented rosy picture of the companies’ accounts”.

Officials of MCA and CAG have met and will shortlist 10 Mumbai-based auditors that could re-examine the accounts. A CAG panel will select the auditors finally, who would audit the firms. A source close to development told Moneycontrol, "None of the big four auditors are part of the CAG empanelled auditors. Moreover, the CAG and MCA wanted auditors from based out of Mumbai.”

This is the first order where the Mumbai bench of NCLT has ordered to re-open the book of accounts of any companies.

In December, the government had filed a plea to re-examine the accounts of the three companies between FY12-13 and FY17-18.

Moneycontrol had first reported that the MCA had sought for the accounts of these companies to be reopened on the interim findings of a probe by the Indian Chartered Accountants Institute (ICAI) and Serious Fraud Investigation Office (SFIO).

Three auditors who were in charge of IL&FS’ books during the period include SRBC & Co, Deloitte Haskins & Sells, and BSR Associates.

As per the MCA petition in NCLT Mumbai, “Deloitte was responsible for IFIN’s accounts from FY16 to FY18, it was the auditor for ITNL as well between FY16 to FY18. EY affiliate SRBC & Co was the statutory auditor for IL&FS for ITNL from FY16-FY18. KPMG affiliates BSR & Associates LLP was the statutory auditor for IFIN from FY16-18 and in the same tenure, BSR audited accounts of ITNL from FY16-FY18.”