INSUBCONTINENT EXCLUSIVE:
MUMBAI: Fearing a backlash from regulatory agencies around corporate governance standards many firms are dropping their auditing assignment
like hot potatoes.
Since January this year more than 30 firms have resigned as auditors of companies midterm, compared to about 7 auditor
resignations in 2017, as per data collated by Prime Database.
In the past few days, Deloitte resigned as auditor of Manpasand Beverages
after the company failed to share key data, and Price Waterhouse (PW) quit as auditor for construction and infrastructure company Atlanta
Limited.
And shares of Dilip Buildcon dipped after rumours around the resignation of the company's statutory auditors.
But experts say more
such resignations could be in the offing
The exodus of auditors seem to be motivated by a fear of being pulled up by the regulator or worse the company getting caught with their
hands in the cookie jar.
Industry trackers say that in many cases, independent directors and company secretaries too have resigned around
firms are parsing through their client portfolio and weeding out risky clients
anonymity.
Audit firms are being especially careful with companies in jewellery, infrastructure and real estate.
Sebi ban on Price
Waterhouse entities barring its network entities from issuing audit certificates to any listed company in India for two years has sent
shudders through the bigger firms.
The larger companies which have much bigger non-audit businesses are being extra careful on the audit
side lest any Price Waterhouse like situation exposes them to penalties or a reputational risk.
A lot of auditors signed on new clients
without proper due diligence during companies law mandated audit rotation to replace the old audit clients which rotated out
Now in some cases, the skeletons in the cupboard are tumbling out as they delve deeper into the affairs of the company and older accounts
signed by various audit firms which had a cosy relation with the promoters or management.
Scared of repercussions, the firms quitting audits
are not even willing to sign the accounts with qualifications or take the matter to board of directors for discussion but want out
completely.
Auditors are caught in a bind as the audit risks increase but the revenue pie has actually shrunk after competitive pricing in
Costs continue to rise and margins are under severe pressure.
Experts feel that audit failures and midterm cessations will increase as fresh
pair of eyes uncover irregularities
stay for one more quarter during audit switch period.
Sai Kanwar and Associates resigned from Fourth Dimension Solutions because of some
health reasons; Sansand and Associates was dissolved so resultantly Touchwood Entertainment audit ceased; V Shivkunar and Associates was
