BackPWC resigns as Reliance Capital auditor over certain transactions
PWC said that as part of the ongoing audit for FY19, it noted certain observations and transactions which in its assessment, if not resolved satisfactorily, might be significant to the financial statementsRCAP said it did not agree with the reasons given by PWC for the resignation
PremiumMumbai: Reliance Capital Ltd’s statutory auditor Price Waterhouse and Co. Chartered Accountants Llp (PWC) resigned without submitting its audit report for fiscal 2019, the company said in a stock exchange filing.
The Anil Dhirubhai Ambani Group (ADAG) company in its disclosure to bourses said that Pathak H.D. and Associates will be its sole auditor. Its term is valid until the conclusion of Reliance Capital’s annual meeting for the year ended 31 March 2021. PWC also resigned as auditor of Reliance Home Finance Ltd.
Reliance Capital’s stock fell 6.4% on Wednesday, while Reliance Home Finance shed 4.23%.
In its resignation letter, PWC stated that as part of the ongoing audit for FY19, it noted certain observations and transactions, which, in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements.
The auditor also raised these issues with the company from time to time starting February 2019, said PWC in the resignation letter uploaded on the website of the ministry of corporate affairs. The letter further said that the audit firm did not receive any substantive or satisfactory responses to the questions raised. Accordingly, the audit firm “sent a letter dated 24 April 2019 under the provisions of Section 143(12) of Companies Act, 2013, read with Rule 13(2)(a) of the Companies (Audit and Auditor) Rules 2014 to the management and Audit Committee of the Company".
PWC added that the company threatened to initiate legal action against the firm, which further impaired its ability to complete the audit in a fair manner. “Such actions create an intimidation threat for us and prevent us from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the company," PWC said in the resignation letter.
The audit firm said that these actions impaired its independence, and hence, it was no longer in a position to complete the audit and instead felt compelled to withdraw from the audit engagement and resign.
A PWC spokesperson said the company does not comment on client matters.
In its letter to the exchanges, Reliance Capital said that it did not agree with the reasons given by PWC for the resignation and that it had furnished all the required documents and details to PWC. “The company has also duly furnished all requisite and satisfactory details as required by PWC, especially including certification and confirmations of the transactions in question on multiple occasions by PWC themselves. As regards legal proceedings, the company had clearly stated that the same would be initiated only if so legally advised, that too if required to protect the interests of all stakeholders, and it is hard to see how PWC has taken exception to this approach," Reliance Capital said in its letter to the exchanges.
On Tuesday, to assuage investor concerns, chairman Anil Ambani said that ADAG was fully committed to meeting all future debt-servicing obligations in a timely manner through further asset monetization plans that were already at various stages of implementation.
He maintained that the group had already serviced a debt of ₹35,000 crore to its various lenders in the last 14 months, including ₹24,800 crore as principal payment and ₹10,600 crore as interest payment.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.
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