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Business News/ Companies / Adani auditor EY faces inquiry by accounting regulator NFRA: Report
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Adani auditor EY faces inquiry by accounting regulator NFRA: Report

The inquiry was started in recent weeks against S.R. Batliboi, one of EY's member firms in India, the report said, citing sources aware of the matter.

FILE PHOTO: The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, January 27, 2023. REUTERS/Amit Dave/File Photo (REUTERS)Premium
FILE PHOTO: The logo of the Adani Group is seen on the facade of its Corporate House on the outskirts of Ahmedabad, India, January 27, 2023. REUTERS/Amit Dave/File Photo (REUTERS)

The National Financial Reporting Authority (NFRA), the country's accounting regulator, has initiated an inquiry against one of the member firms of Adani Group's longtime auditors EY, Bloomberg reported on October 25, citing sources privy to the development.

The inquiry was started in recent weeks against S.R. Batliboi, one of EY's member firms in India, the persons aware of the matter told the news agency.

The regulator has requested files and communications related to its audits on some of the companies controlled by billionaire Gautam Adani going as far back as 2014, the report claimed, adding that it was unclear how long NFRA’s inquiry could take or what repercussions, if any, could be faced by the auditor and Adani’ Group companies.

S.R. Batliboi, notably, is the statutory auditor of five listed Adani companies that produce about half of the group’s revenues. The inquiry, as claimed in the report, underscores the lingering questions around accounting and disclosures by the ports-to-power conglomerate that faced a brutal short seller attack in January. 

Responding to the Bloomberg report, a spokesperson of the Adani Group said, “We strongly reject any suggestion that Adani Group and its businesses have not acted as per the regulations and accounting standards of the jurisdictions in which we operate."

“The Adani Group has always conducted its business in compliance with all applicable laws and regulations and is confident about its practices, governance and disclosures," the spokesperson added.

Adani Group, which had earlier forcefully denied Hindenburg’s allegations of corporate malfeasance, is also under a court-mandated probe by market regulator SEBI.

Besides being the current auditors for Adani Power Ltd., Adani Green Energy Ltd., the consumer goods firm Adani Wilmar Ltd. and the two cement makers the tycoon acquired from Holcim Ltd. last year, S.R. Batliboi also signed off on the books of Adani Ports & Special Economic Zone Ltd., the conglomerate’s crown jewel, for a decade leading to 2017.

Indian law prohibits foreign accounting firms from registering as auditors in the country. That’s why Big Four firms including EY operate through independently run affiliates.

Hindenburg raised questions over Adani’s accounting and audits in a January report that erased more than $150 billion in market value at one point from the conglomerate’s listed companies.

The group said in a January 29 rebuttal that its firms are audited by “duly certified and qualified" professionals.

(With Bloomberg inputs)

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Published: 25 Oct 2023, 03:14 PM IST
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