Financial Technologies India's statutory auditor withdraws report due to NSEL crisis

Written by PTI | New Delhi | Updated: Sep 25 2013, 02:29am hrs
BusinessFTIL's statutory auditor Deloitte Haskins & Sells has withdrawn its audit report.
Auditors have raised serious doubts on accounts of Jignesh Shah-led Financial Technologies India Ltd (FTIL) saying the financial statements for 2012-13 cannot be "relied upon" any "longer" in the wake of payment crisis at the firm's subsidiary, NSEL.

FTIL's statutory auditor Deloitte Haskins & Sells has withdrawn its audit report certifying accounts of the company for 2012-13 fiscal as the Rs 5,500 crore payment crisis at NSEL balloned.

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The audited accounts were to be placed for FTIL's annual shareholder meeting tomorrow but the auditor redflagged the financial statements and withdrew its report.

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National Spot Exchange Ltd (NSEL), a firm owned by FTIL, has defaulted for five consecutive weeks on payments to be made to its 13,000 investors.

"Due to the purported crisis at NSEL in the recent past and based on the communication of management of NSEL and the statutory auditor of NSEL on the financial statement of NSEL, the statutory auditors of the company on September 23 informed that the audit report dated May 30, 2013 on the standalone and the consolidated financial statements of the company for the year-ended March 31, 2013 should no longer be relied upon," FTIL said in a filing to the BSE.

Sources said that FTIL's statutory auditor Deloitte Haskins & Sells, the CA firm, has withdrawn the audit report as the NSEL's auditor Mukesh P Shah & Co has also withdrawn the report.

In the filing, FTIL said that it has decided to defer the agenda item number 1,2 and 5 of the notice of Annual General meeting on September 25 to respect auditor's view and would satisfy the statutory auditors of the company on standalone financial accounts.

The standalone and consolidated financial statement has been audited prior to the event occured at NSEL, FTIL said.

FTIL said its standalone and consolidated accounts for the FY 2012-13 might undergo amendment together with revised auditor's report which will be approved and finalised

The agenda number one was to consider and adopt the Audited Balance Sheet and the Profit & Loss Account for the year ended March 31, 2013 and the Reports of the Board of Directors' and Auditors' thereon.

The second agenda was to ratify the payment of interim dividend and to declare a final dividend on equity shares, while the fifth one was to re-appoint Deloitte Haskins & Sells, Chartered Accountants (ICAI Registration No. 117366W), as the statutory auditors of the company.

NSEL has engulfed into a crisis after it stopped trading of all its contracts on July 31 following the government's direction.

Meanwhile, FTIL in a statement said the impact of NSEL on the company is not 'material' in the standalone financial statement, as contribution of bourse's revenue in the net profit of the company is only 6.56 per cent.

FTIL also added that the balance sheet has already been approved alongwith auditor's report before the crisis at NSEL came into light.

The development of NSEL took place post May 30, 2013, post signing of audited accounts for the year ended March 31, 2013 and auditors' report thereon; as NSEL crisis came to the notice of FTIL on July 31, the statement said.

The Balance Sheet was also approved and recommended to the shareholders on May 30, 2013.

As per standalone financial statement of FTIL, the total income forms part of revenue generated from NSEL during the fiscal 2012-13 is largely on account of technology services which contributes only 4.79 per cent of the total income of FTIL, further there is no outstanding amount pending against the same.