Notices to operators notwithstanding, DoT stops short of scrapping auditors panel

DoT will continue with the auditors and have a special audit done for 2008-09, 2009-10, and 2010-11, according to a source.

The Department of Telecommunications (DoT) is unlikely to scrap the panel of auditors appointed by it for conducting a special audit of telecom companies’ books to find any understating of revenues, despite it having used the findings of the Comptroller and Auditor General (CAG) of India to issue notices to six telecom operators demanding Rs 100 crore as part of the dues owed to the government on account of their under-reporting of revenues.

These demand notices have been issued to mobile companies including Bharti Airtel, Reliance Communications, and Vodafone India, in the wake of the controversy over the Centre’s move to have the books of telecom firms audited through empanelled auditors even as the Supreme Court had authorised the CAG for carrying out this task.

A senior government official told The Indian Express that not only would the DoT continue with the empanelled auditors but would also have a special audit done for financial years 2008-09, 2009-10, and 2010-11. The DoT official, citing clauses 22.5 and 22.6 of unified licencing conditions, said that the government has the powers to order special audit of the service providers’ accounts by appointing an auditor, and has conducted the audit for financial years 2006-07 and 2007-08. “The licensor may, on forming an opinion that the statements or accounts submitted are inaccurate or misleading, order audit of the accounts of the licensee by appointing auditor …,” says the Clause 22.5 of the unified licence regime. However, the question remains as to how the DoT arrived at an opinion that the operators’ declared accounts were “inaccurate or misleading”.

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The DoT official added that the empanelled auditors were appointed after seeking invitations from a panel selected by the CAG itself. “The government has the authority under the licencing conditions to conduct the special audit. We could not have waited for the CAG’s audit, or asked the CAG to conduct it as per our convenience. An audit for periods 2006-07 and 2007-08 had been conducted earlier,” the official said. Earlier this month, the Congress party had questioned the DoT’s decision to conduct a “re-evaluation” of the CAG’s findings that six telecom operators understated gross revenue of over Rs 46,000 crore between 2006-07 and 2009-10, causing a loss of over Rs 12,000 crore to the government. The loss comprises Rs 5,000 crore of spectrum usage and licence fees and Rs 7,000 crore as interest.

The Congress party asked whether the re-evaluation by “chartered accountants who are empanelled by the telecom ministry”, was a “grotesque breach of public trust by the BJP government given the fact that the BJP when in opposition had made a notional loss pegged by CAG in telecom sector a major issue of transparency and corruption.”