India’s National Company Law Tribunal (NCLT) has set a deadline of Friday, 19 July 2019, for Deloitte Haskins & Sells and BSR & Associates to present their defence against the Indian government’s demand that the firms be banned from conducting audit business in the country for five years.
The threat of a ban to Deloitte and the KPMG-linked BSR & Associates result from the financial wrongdoing uncovered at IL&FS Financial Services.
In a hearing at the NCLT on 15 July, defence argued that firms could only be banned in case where a final ruling had been made and where there was proof that the auditors had ‘abetted or colluded’ in a fraud.
Indian news service Economic Times reported: “In a 32,000-page charge sheet filed by the Special Fraud Investigation Office (SFIO) of the ministry of corporate affairs (MCA), it was alleged that the auditors suppressed information on various loans, inflated profits and presented a rosy picture of the company.”
Ahead of the hearing on 15 July, Reuters had reported that Deloitte had argued for the dismissal of the government case against the firm, arguing that it came after the auditor had ceased to audit the firm. Reuters cited a government filing that said “A fraud that continues till date on account of errant past auditor… can undoubtedly be covered’ under Indian law.
Both Deloitte and KPMG affiliate BSR & Associates deny the allegations being made by the Indian government.
