IL&FS and ITNL Looking to Replace Auditor SRBC & CO

Infrastructure Leasing & Financial Services (IL&FS) and subsidiary IL&FS Transportation Networks Ltd (ITNL) are evaluating replacement of auditor SRBC & Co, and EY affiliate, as their statutory auditor, after a damning audit quality review report by the National Financial Reporting Authority.

The 343-page report released on Thursday said SRBC did not raise red flags in critical areas like going concern, evaluation of ITNL’s investments and loans.

Responding to ET’s query, IL&FS said discussions were ongoing around the continuation or otherwise of the auditor, and that the audit committee would soon take a call.

“So far neither IL&FS/ITNL has asked SRBC to resign, nor has SRBC offered to resign. This is under examination and is being referred to the audit committee of ITNL for appropriate recommendation to the board of ITNL,” IL&FS spokesperson Sharad Goel said.

EY did not respond till Sunday press time to an email seeking comment sent on Friday evening.

The National Financial Reporting Authority (NFRA), part of the Ministry of Corporate Affairs, has gone into detail how the auditor did not interpret some of the accounting entries as they ought to be.

This would mean that the financial statements prepared by ITNL and approved by the auditor did not represent the real picture.

This development comes at a time when IL&FS government-appointed board is trying to sell ITNL’s assets. S-ET

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