The Anil Ambani-led Reliance Capital Ltd on Thursday termed audit firm Price Waterhouse & Co’s (PWC) observations as baseless and unjustified.
In a statement issued here, the company said: “PWC’s observations are completely baseless and unjustified. PWC has acted prematurely without even statutory discussions with the Audit Committee.”
According to the company, its continuing auditor Pathak H.D. & Associates has been mandated by the Audit Committee to submit its independent report on PWC’s observations within 15 days.
The company said it was confident that the independent report of the continuing auditor will establish that there are no irregularities.
The PWC resigned as one of Reliance Capital’s statutory auditors on Tuesday.
Refuting PWC’s charges of funds diversion, Reliance Capital said: “There is no question of ‘diversion’; zero loans and/or liquidity have been provided by any lender in the PWC audit period. Reliance Capital is by law required to fund only group entities, being a Core Investment Company (CIC).”
The company said all resources have been utilized to support group debt servicing of Rs 35,000 crore in the past 14 months.
In a regulatory filing, Reliance Capital on Tuesday on the reason for resignation of PWC, said: “PWC has stated that as part of the ongoing audit for F.Y. 2018-19, it noted certain observations/ transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements and that it did not receive satisfactory response to its queries.
“PWC has further stated that though it sent a letter dated April 24, 2019 under relevant provisions of the Companies Act, the Company disputed the same to be in accordance with the provisions of law, notwithstanding a subsequent letter issued by PWC on May 14, 2019 to reiterate the intent of letter issued on April 24, 2019, and the Company did not convene an audit committee meeting within the expected time.”
“The Company also stated that it might initiate appropriate legal proceedings against the firm. According to PWC, these actions by the company have prevented it from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the Company, and impaired its independence, and hence, it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign,” Reliance Capital added.
Disagreeing with the PWC’s reasons for resignation, Reliance Capital had said: “The company has duly responded to the various queries and letters of PWC and has also duly and validly convened a meeting of the Audit Committee on June 12, 2019, to further respond to the letter dated May 14, 2019, from PWC.
“The company expected PWC to have participated in the meeting of the Audit Committee and not resigned on the eve thereof. The company has also duly furnished all requisite and satisfactory details as required by PWC, especially including certification and confirmations of the transactions in question on multiple occasions by PWC themselves.
“As regards legal proceedings, the Company had clearly stated that the same would be initiated only if so legally advised, that too if required to protect the interests of all stakeholders, and it is hard to see how PWC has taken exception to this approach.”