What 8K Miles Software’s Auditor Said In Quarterly Statement
Auditor to 8K Miles Software Services Ltd. highlighted receivables and lack of information on loans or proposed borrowing by the cloud services provider that has been under a cloud about suspicious transactions.
Deloitte Haskins & Sells pointed out that the company had receivables from related parties, and had paid a processing fee but didn’t disclose any borrowing or proposed borrowing, according to earnings statement filed with exchanges. It conducted a review and didn’t audit the books, the statement said.
Shares of 8K Miles Software Services have tumbled 88 percent this year. The latest trigger was the resignation of GHG Associates Chartered Accountants, auditor to its promoter 8K Miles Media, alleging that the company forged a partner’s signature on bank investment certificates to transfer money abroad.
Deloitte Haskins & Sells was made aware of the resignation in September. Here’s what it said:
- 8K Miles Media and subsidiaries have been identified as related party as per the consolidated financials.
- The chief financial officer of 8K Miles Software Services Ltd. (RS Ramani), who was a promoter-director in 8K Miles Media, resigned from his role to have the necessary time to clear allegations against 8K Miles Media by the auditor. He, however, continues to be a director in both 8K Miles Software and 8K Miles Media.
- Subsidiary 8K Miles Software Services Inc has receivables of Rs 34 crore from 8K Miles Media Group.
- Unable to conclude if that will have any effect on India-listed 8K Miles Software Services Ltd. and its operations.
- 8K Miles Software Services Ltd. has export trade receivables aggregating Rs 15.9 crore outstanding for more than nine months from the invoice dated Sept. 30. This is beyond the time limit stipulated under the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015.
- The company paid Rs 36.11 lakh to a bank as processing fee for loans. Auditors were not provided with details of the borrowing/proposed borrowing.
In the quarter ended September, 8K Miles Software’s profit rose 7 percent on a yearly basis and its revenue jumped 18 percent. Its shares have rebounded this month, rising more than 74 percent since Nov. 1.