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PWC resigns as auditor to Reliance Capital, Reliance Home Finance

In separate statements to the National Stock Exchange of India, Reliance Capital and Reliance Home Finance report that Price Waterhouse & Co Chartered Accountants LLP (PWC) has resigned as statutory auditor in letters dated 11 June 2019. Pathak H.D. & Associates has confirmed that it will continue as the sole Statutory Auditor of Reliance Capital.

Reliance Capital says it does not agree with the reasons given by PWC for the resignation and that it has duly responded to the various queries and letters of PWC and has also duly and validly convened a meeting of the Audit Committee on 12 June 2019 to further respond to a letter dated 14 May 2019 from PWC. The company had expected PWC to participate in the meeting of the Audit Committee.

The company said it ‘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’.

In resigning, PWC stated that as part of the ongoing audit for FY 2018-19, it noted certain observations/transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements, and that it did not receive satisfactory responses to its queries.

PWC has further stated that though it sent a letter dated 18 April 2019 under relevant provisions of the Companies Act, the company disputed that it was in accordance with the provisions of law, notwithstanding a subsequent letter issued by PWC on 14 May 2019 to reiterate the intent of letter issued on 18 April 2019, and the company did not convene an audit committee meeting within the expected time.

Reliance Capital also stated that it might initiate appropriate legal proceedings against the firm. According to PWC, these actions by the company have prevented it from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the company, and impaired its independence, and hence, it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign.

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