Wednesday, September 25, 2013

FTIL auditor withdraws report

FTIL chief Jignesh Shah 

Doubts Genuineness Of Co’s Results Following Similar Move By NSEL Auditor



Mumbai/New Delhi: The payment crisis and the alleged frauds at the defunct National Spot Exchange (NSEL) have hit Financial Technologies (FT), the promoter of the commodities exchange. On Tuesday, FTIL informed the stock exchanges that its statutory auditor Deloitte, Haskins & Sells has withdrawn its certificates about the genuineness of the company’s results for 2012-13 which the firm had audited and cleared earlier. 

    Deloitte’s move was prompted by a similar action by NSEL’s auditor Mukesh T Shah & Co, which informed the spot exchange about its decision on Saturday. 
  The move by Deloitte became public a day before FTIL shareholders meet for its annual general meeting and the company said that it will now have to defer discussion on some of the issues that related to the audit report. 

    Although the development has not resulted in any scrutiny by the government yet, sources said that Deloitte will have to revisit its entire audit of FTIL in the wake of the controversy at NSEL. “On the basis of the above, FTIL’s accounts for financial year 2012-13 may undergo amendment together with revised auditors’ reports which will be approved and published once the amendment to the accounts are finalized,” FTIL
said in an exchange filing. 

    FTIL is the flagship of the group that promoted NSEL and is run by engineer-turnedentrepreneur Jignesh Shah. In its communication to the BSE, the company said that due to the purported crisis at NSEL and based on communication from the management
of NSEL and also the statutory auditor of the bourse, on September 23, Deloitte, “in accordance with Standard on Auditing (SA) 560, informed that the audit reports dated May 30, 2013, on the standalone and consolidated financial statements of the company for the year ended March 31, 2013, should no longer be relied upon”.

    FTIL also clarified that while the NSEL crisis was out in the open on July 31, the company’s balance sheet was approved and recommended to the shareholders on May 30, along with the auditor’s report. Also, the annual report
was circulated to FTIL shareholders around August 30.
    According to standalone financials of FTIL, the total income forms part of revenue generated from NSEL during FY13, largely on account of technology services which contributed only 4.79% of the total income of FTIL. In addition, there was no outstanding amount pending against the same, the company said. Also, according to standalone financials of FTIL, the contribution from revenue generated from NSEL in the net profit was only 6.56%. “As stated above, both from total income and net profit perspectives, the impact on account of NSEL is not material in the standalone financial statement,” the statement said. 
 EOW sniffs financial fraud at NSEL
Mumbai: The city police’s economic offences wing (EOW) has found some truth in allegations by investors that money was siphoned off by top executives and others at National Spot Exchange (NSEL), the commodity bourse hit by a payment crisis. 

    On Tuesday, a 32-page preliminary enquiry (PE) report was submitted to EOW additional commissioner of police Rajvardhan Sinha, and it found that there were evidence of financial fraud at the commodity bourse promoted by
Jignesh Shah-controlled Financial Technologies group.
    In mid-Setpember, in a significant development as part of the ongoing Rs 5,500-crore NSEL saga, around 58 investors and 17 brokers and members of NSEL filed a complaint with the EOW against NSEL, Jignesh Shah, the promoter of Financial Technologies group that owns NSEL, and the board of directors of NSEL. The complaint has also been made against executives of NSEL, including Amit Mukherjee and Jai Bhaukhundi, its auditor Mukesh Shah & Co, and 24 defaulters and their clients.

The Times of India, September 25, 2013

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