Reliance Capital and Reliance Home Finance, belonging to the Anil Ambani-led Reliance group, on Wednesday said Price Waterhouse & Co Chartered Accountants (PWC) has resigned as statutory auditor of both the companies.
In separate but identical stock exchange filings, both the companies said PWC has put in its resignation with effect from June 11, 2019, citing unsatisfactory response to “certain observations” made by it as a part of the ongoing audit for fiscal 2018-19.
Shares of Reliance Capital fell 6.82 per cent to close at Rs 87.50 on the BSE. Reliance Home Finance declined 3.94 per cent at Rs 17.05. “The company does not agree with the reasons given by PWC for the resignation. 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 two companies said.
“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,” they said.
“The other duly appointed auditor, Pathak H.D. & Associates, whose term is valid until conclusion of the AGM for the year ended March 31 , 2021 , has confirmed that it will continue as the sole statutory auditor,” Reliance Capital said.
“PWC has stated that as part of the ongoing audit for FY 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,” the filing said. 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 exchange filings of both the companies said.
“The company also stated that it might initiate appropriate legal proceedings against the firm,” the filing said. 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,” the filing said.