DoT appoints Parekh & Co to do special audit of RCom accounts

DoT appoints Parekh & Co to do special audit of RCom accounts
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First Published: Tue, Jan 27 2009. 10 45 PM IST
Updated: Tue, Jan 27 2009. 10 44 PM IST
New Delhi: The Department of Telecom is all set to appoint Mumbai-based auditor Parekh & Co to scrutinise the accounts of Reliance Communications and its subsidiaries under a special audit to ascertain if there is any violation of revenue reporting norms to avoid payment of licence fees.
DoT sources said Parekh & Co was selected out of the five shortlisted firms that included Chhajed & Doshi, Nayak & Kishnadwala, Varma & Varma and G D Apte & Co.
Meanwhile, RCom has vehemently denied the accusations, saying its payment of licence fees and spectrum charges is based on the revenue arising from businesses covered by the UAS licence.
This is first time that a special audit is being conducted since New Telecom Policy of 1999.
The special audit is taken up when the Department doubts the figures and statements offered by the company, thus necessitating a verification.
Once on job, the firm would examine the Anil Ambani-led company’s accounts for 2007-08, as it has been alleged that the firm was showing income from non-voice services under its Internet services licence to avoid paying dues to the Government.
RCom is alleged to have reported income from services like R-World, SMS, rural telephones under support from USO fund, and Internet browsing under its Internet services business. The Government levies a lower revenue share on ISP licence.
If proved guilty, DoT can impose a penalty as per the licence conditions.
Denying the accusations, RCom said, “DoT requires only limited reporting of revenues arising from activities covered by the UAS Licence. The financial reports presented to the shareholders and to the stock exchanges requires an altogether different basis.
“In particular, it requires consolidation of the accounts of all subsidiaries operating under other licences, such as the ISP licence or operating activities not requiring a licence, such as Treasury Activities, and Sale of Handsets, or operating in jurisdictions outside India...foreign subsidiaries.”
“There is no basis for any accusation relating to alleged discrepancies in the accounts of the company. The company is not aware of any proposal for a special audit of the company’s Accounts. The company is, however, prepared to furnish any additional information required by DoT and/or TRAI and/or by any auditor appointed by them,” RCom said.
It further said its statutory auditors include BSR & Company, a Member Firm of KPMG International, and Chaturvedi & Shah, a Member Firm of Nexia International. The auditors have approved the company’s calculations and accounts and there have been no adverse comments by the auditors, it added.
DoT sought from the Controller and Auditor General of India (CAG) to appoint a special auditor to examine the books of Reliance Communications over allegations that the telcom firm in FY 08 diverted revenue earned from its mobile services to a subsidiary in an attempt to bring down the total amount it had to pay to the government as licence fee and spectrum charge.
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First Published: Tue, Jan 27 2009. 10 45 PM IST