Unsatisfactory response to the auditor's queries pertaining to the housing finance company’s fund deployment is believed to be the reason for the trouble
Crisis-hit Dewan Housing Finance Corporation (DHFL) might receive another blow as its auditors might resign ahead of its board meeting on July 13, reports Business Standard. Unsatisfactory response to the auditor's queries pertaining to the housing finance company’s fund deployment is believed to be the reason for the trouble.
Deloitte Haskins & Sells and Chaturvedi & Shah -- DHFL’s two statutory auditors -- are yet to conclude auditing the company’s FY19 financial accounts. In June, the company had deferred announcement of its Q4 FY19 results after receiving the market regulator’s nod, citing "certain unforeseen operational engagements including non-availability of a few directors to ensure participation of all the members of the audit committee as well as the board for taking into consideration and approval of the financial results for the fourth quarter/financial year ended March 31, 2019", the Economic Times reported.
Sources told the paper that auditors haven’t sought any extension to sign the final accounts yet. Auditors are under additional pressure to ensure that there are no discrepancies in the company’s annual reports as DHFL faces allegations of fund diversion via shell companies. Statutory auditors are required to inform the Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI) before resigning, a condition necessitated by the Companies Act, 2013.
A resolution plan for the cash-starved DHFL is yet to be finalised, with the consortium of 31 lenders to the company set to meet on July 11 to sign an inter-creditor agreement for the company. All banks have nodded in favour of the agreement, Business Standard reported, which would entail an additional line of credit for DHFL on a monthly basis.
The company’s board of directors are due to meet on July 13 to ratify the company’s Q4 numbers and its FY19 financial account.Following the Infrastructure Leasing & Financial Services (IL&FS) crisis, there have been several instances of auditors resigning, the most recent being PwC's resignation as the auditor of Reliance Capital, Reliance Home Finance and Eveready Industries.