Resignations by auditors of listed corporates continue unabated with as many as 14 firms losing their auditors so far in 2019 for reasons varying from lack of corporate governance in the firms to the auditor's pre-occupations.
Resignations by auditors of listed corporates continue unabated with as many as 14 firms losing their auditors so far in 2019 for reasons varying from lack of corporate governance in the firms to the auditor’s pre-occupations.
The year 2018, when some of the PwC affiliates were banned by Sebi for two years in the decade-old Satyam scandal case, saw the highest number of auditor resignations in five years, according to nseinfobase.com data. In 2018, auditors quit 48 NSE-listed companies, four times more than in 2017 and 2016.
Analysts attribute the increasing trend of resignations by statutory auditors before end of their contractual terms to fear of Sebi action if some lacunae is found later on the part of auditors.
Auditors including Price Waterhouse & Co, Deloitte Haskins and BSR & Associates have ended their roles as auditors of 86 NSE-listed companies in the last five years.
The registrar of companies (RoC) has recently tightened norms by asking auditors to explain the specific reasons for tendering resignations as ambiguous reasons like ‘pre-occupation’ are untenable.
On resigning, the auditor is required to file a return in e-form ‘ADT-3’ with the RoC concerned and is required to furnish the reasons for the resignation. Under the provisions of Companies Act, 2013, an auditor who finds during an audit that fraud has been committed by the company or its employees should report the matter immediately to the central government.