The Ministry of Corporate Affairs has initiated an investigation into auditor resignations at listed Indian companies as it seeks more information on the issues raised by these audit firms, a senior government official told reporters.
Queries have been sent under Section 143 (12) of the Companies Act, 2013 based on 15 complaints received by the government, the official said. Under this section, an auditor, who during the course of an audit, finds that a fraud has been committed by the company or its employees, must report the matter immediately to the central government.
Accordingly, the government has sought more information from these audit firms, saying the issues highlighted by them were inadequate, the official added.
In the last two months, Price Waterhouse & Co. resigned as auditor of Vakrangee Ltd. and Atlanta Ltd. while Deloitte Haskins & Sells resigned as auditor of Manpasand Beverages Ltd. In all three instances, the auditors stepped down just days before finalising the annual accounts, citing inadequate information shared by the companies during the course of the audit of their financial statements.
Thirty-two auditors of listed firms have resigned mid term between January and May this year, Mint said in a report dated June 5.
If auditors are resigning due to professional issues and not on personal grounds, the government or the regulator has to step in, the official quoted above said.