I have my own question ?? Is it possible and in practice to escape from prosecution Audit Report can be withdrawn? Before giving any report one should think. It is not a Slate Pen which can be removed as and when correction is required.
This reminds me a recent case of Ratnamani Metals and Tubes Limited 2013 Accounts , where there is a change in Valuation of Inventory from FIFO to weighted Average Method of valuation of stock. As in earlier year in 1994.God save us. Both Account are attached.
Where our profession is heading to !!!!!
C A Shah D J
India
This reminds me a recent case of Ratnamani Metals and Tubes Limited 2013 Accounts , where there is a change in Valuation of Inventory from FIFO to weighted Average Method of valuation of stock. As in earlier year in 1994.God save us. Both Account are attached.
Where our profession is heading to !!!!!
C A Shah D J
India
On Friday, 22 November 2013 10:05 PM, CA. DEEP KUMAR JAIN <deepjainca@gmail.com> wrote:
----- Original Message -----From: arun giriTo: arun giriSent: 14 November, 2013 7:11 AMSubject: [AwakenedCAs] Council Affairs: Council member's firm withdraws audit report after 1000cr hole, is FRRB awake?--Dear Friends,Please do go through Appaji's mail below and the newspaper articles... a firm in which a Central Council member (Southern Region ) is senior partner, has informed its auditee company First Leasing, that certain audit reports/certificates issued by them regarding the previous year's financial statements should no longer be relied upon. After issuing this withdrawal/part withdrawal of opinion or whatever it is called ( our Council members would know better.. can we pls have a CPE seminar on this? ) , the auditors promptly resigned ............But if you think this was a pro-active move by the auditors of First Leasing, it doesnt appear that way ... the audit report seems to have been withdrawn after an RBI inspection uncovered a Rs. 1,000 hole in company's balance sheet and the company was barred from doing business. The RBI has now appointed a special auditor ....Well, now if GUjarat NRE Coke is anything to go by, nothing will happen in this case also. It has been 45 days since potentially massive audit gaps at Gujarat NRE Coke hit the headlines, but FRRB has yet to meet after that.... so much for prompt action! At that time, i had written that Mr. Nilesh Vikamsey ( Chairman, FRRB ) 's otherwise brilliant knowledge of auditing seemed to be suffering from temporary memory loss like Aamir Khan's character in Ghajini. I was wrong.... this is not Ghajini, but a case of amnesia, i.e. selective memory loss....Does anyone of us have any faith left in Council to take action against its own President and fellow colleagues? They are busy preparing for some mega CPE conference... FRRB meetings can wait ....I am reminded of that all time classic scene from Yash Chopra movie Mashaal, where Dilip Kumar is shouting hoarse for help and his wife is lying on the road with acute pain.... car after car passes without bothering to wait for a second......Dilip Kumar keeps crying and shouting - " Ae Bhai Koi Hai... Koi Hai.. Madat karo bhai... "Our Council members are in those cars and then there are idiots like Venkatesh, Prabhakar, me, Appaji etc. who are shouting and shouting - "Koi Hai"?Who is bothered about a Rs. 1,000 cr hole ? By the way, when is the next big CPE event? That is way more important....Sincerely,Arunps: I ve deliberately not named the Council member....
---------- Forwarded message ----------
From: Suneel Kumar Appaji., FCA <appajiappaji@gmail.com>
Date: Wed, Nov 13, 2013 at 1:48 PM
Subject: One more Audit report where auditors stated can not be relied upon..............
To: ICAI_CIRC_MEERUT_CA@yahoogroups.com
Dear AllOne more Audit report where auditors stated can not be relied upon..............The firm is having a Council member in his third term as partner and one former Registrar of Companies has signed the reports which is now saying the audit reports & certificates are no longer reliableThere is a saying in telugu - translated here -with six months togetherness, one will be the other -with so many years of council membership and togetherness, this council member is in elite club of those BIG FIRMS which have started a new practice of "announce the reports signed by us are no longer reliable"see the story pasted hereunderHats off to this firm - deserves to join BUG FIRMS category - sorry - BIG FIRMSPosted by C Venkatram FCA in the facebookwhile we were busy with our efiling this report in The Economic Times went unnoticed by most of us.
We see auditor's withdrawing their report is becoming a trend these days. What does this mean-
OPENING UP FOR YOUR COMMENTS
First Leasing's Farouk Irani admits Rs 1,000-crore gap in balance sheet
The Economic Times
ET Bureau Sep 30, 2013, 04.00AM IST
MUMBAI: A fortnight ago, chatting with bankers at Chennai's Haddows Club, Farouk Irani, a pioneer in India's leasing business, admitted that the company he led for decades along with industrialist friend AC Muthiah, has a hole of Rs 1,000-crore in its balance sheet.
Assets worth only Rs 200 crore has been created by First Leasing Company of India, where Irani has been the managing director since 1973, out of bank finance of more than Rs 1,200 crore.
When the team of financiers led by a senior official of State Bank of India asked Irani where the remaining funds were deployed, he could not give any 'satisfactory reply". Stunned bankers told the company to close accounts with all banks outside the consortium, a source familiar with the development told ET.
The person also said that there were question marks on the audited financials of First Leasing, a Chennai-based listed company. The meeting with bankers took place a few days after the Reserve Bank of India barred the company from doing any business until further orders. "We confirm an RBI audit is under way of our accounts and until the audit is complete we cannot presuppose what the numbers are," said Irani, responding to ET's email query. When told that there are suspicions that funds have been diverted by the company's management to unrelated activities, Irani said, "There has been no diversion of funds. Once the RBI audit is over it will reconfirm money was not diverted for any improper purpose.
Funds have only been committed for the benefit of the company's stakeholders which would include payment of interest to the banks, the income tax, sales tax, salaries to the staff etc."
Sarathy & Balu was the company's statutory auditor for the financial year 2012-13 while MK Dandeker & Co was the internal auditor. NR Sridharan, partner at Sarathy & Balu, could not be contacted despite repeated attempts.
The company has been asked by its bankers to immediately open an escrow account with SBI and, collect and submit post dated cheques given to customers to SBI for credit, besides furnishing a list of receivables and assets.
According to banking circles, the company's troubles started during the 1980s when Mercantile Credit Corporation, a group company of MAC, founded by Muthiah's father late MA Chidambaram, ran into trouble. (Muthiah is the chairmanemeritus of Southern Petrochemical Industries)
In 1988, First Leasing had to pay out Rs 170 crore to depositors, borrowing money at a higher rate, when MAC faced financial difficulties. The tight money condition of the 1990s worsened things and later Rs 65 crore was lost in "misguided transactions" (but this amount was recovered after a period of time). The payment of Rs 170 crore, however, was never reported to banks.
The CEO of another south-based financial services group told ET that First Leasing also lost out as it failed to change with time and bring in new financial investors like private equity houses. More recently, it has been borrowing from banks to repay dues. The members of banking consortium include SBI, IDBI, UCO, State Bank of Travancore, Syndicate, Vijaya, State bank of Patiala, ICICI, IndusInd, Axis, Bank of Maharashtra, State Bank of Mysore, HDFC, and Catholic Syrian. The combined credit limit extended by them is.`1,322 crore and the present standing is Rs 1,211 crore.
First Leasing Co of India auditors red-flag over previous year's financial statements
Sanjay Vijayakumar, ET Bureau Oct 9, 2013, 11.26AM IST
CHENNAI: Auditors have raised the red flag over the previous year's financial statements of Chennai-based First Leasing Co of India Ltd, a joint venture of Farouk Irani and SPIC Group's AC Muthiah.
In a late announcement to the stock exchanges Tuesday, First Leasing said it has received a letter on October 3 from M/s Sarathy and Balu, its statuary auditors, stating that certain audit reports/certificates issued by them regarding the previous year's financial statements should no longer be relied upon.
The move comes after the RBI, after inspecting its books last month, barred the firm from running any business. An ET report raising question marks about First Leasing's financial statements followed.
The period mentioned by the auditors includes fiscal 2013 (financial statements as also limited review reports for each quarter) and the first quarter of the current fiscal.
The announcement further said that the financial statements for 2013 may undergo amendments; they will be published with revised auditor reports once the amendments are finalised.
On Monday, foreign fund Jupiter South Asia Investment Co Ltd sold almost its entire stake of 2.94% in the firm in two separate open market transactions. Shareholding data shows the fund held the stake since March 2010.
BUSINESS STANDARD REPORT
BS Reporter | Chennai
October 26, 2013 Last Updated at 00:19 IST
The Reserve Bank of India (RBI) has appointed an auditor for a special audit of the book of accounts and transactions of First LeasingCompany of India, from the year ended March 31, 2010.
A C Muthiah, the chairman of First Leasing, also said its board of directors had accepted last week's resignation of Farouk Irani as managing director (MD), though this would not absolve him of accountability to the company, stakeholders and statutory authorites.
The company told the BSE exchange on Friday that N C Rajagopal & Co, chartered accountants, had been appointed by RBI to do the special audit.
The company has also appointed former Supreme Court judge, S Mohan, as an additional director (non-executive and independent) on the board.
Earlier, the company said its statutory auditor had informed it that some of the audit reports and certificates issued by them should no longer be relied on and the financial statements might undergo amendments.
In September 2013, the RBI had directed the company not to transact any business or incur any further liabilities, in the light of the findings of the inspection of the books of accounts and other records as on March 31, 2013. It also restricted the Chennai-based finance company from declaring or distributing a dividend. The company is not to sell, transfer, create a charge or mortgage or deal in its property or assets without RBI's permission.
The action on Irani came after he conveyed his plan to resign last week, in view of the recent developments. These included media reports stating he'd admitted to a gap of around Rs 1,000 crore in the company's balance sheet, a reply by the board of directors to the regulator on the issue and Irani's attempt to withdraw the board's reply.
The company was incorporated by A C Muthiah as the First Leasing Company of the Country on September 10, 1973, with Irani, a pioneer of corporate leasing services in India, as MD.
--
Suneel Kumar Appaji FCAKnowledge Architect & Management Adviser
99893 10302, 90147 10302
WELCOME TO CAUSE OF CA............. STRONGLY RAISE YOUR VOICE...WITH OUT ANY FEAR FOR THE CAUSE OF THE PROFESSION................
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