Auditor refuses to sign Financial Tech accounts

BL :MUMBAI, SEPT. 24: 2013

Annual General Meeting scheduled to be held in Chennai today

 

In what could lead to a major furore at the Financial Technologies Annual General Meeting scheduled for Wednesday in Chennai, the auditors refused to authenticate the financial statement of the company due to the Rs 5,600-crore trade settlement crisis at its subsidiary, National Spot Exchange Ltd (NSEL).

This development may also delay dividend payment to investors as the company deferred consideration of this proposal at the AGM. Statutory auditor Deloitte Haskins & Sells said the financial statement of Financial Technologies could not be relied upon due to the crisis in NSEL.

In a statement, Financial Technologies said: “Due to purported crisis at NSEL in the recent past and based on the communication of management of NSEL and the statutory auditor of NSEL on the financial statement of NSEL, the statutory auditors of the company on September 23, in accordance with Standard on Auditing 560 informed that the audit reports dated May 30 on the standalone and the consolidated financial statement of the company for the year March 31 should no longer be relied upon.”

The company has decided to defer three agenda items, including consideration of audit report, dividend payment and reappointment of Deloitte Haskins as auditor for this financial year, at the AGM.

Following this development, the company said the financial accounts may undergo amendment together with revised Auditors’ Report which will be approved and published once the accounts are finalised.

The company also said the balance sheet was approved by the auditors and recommended to the shareholders on May 30 while the NSEL crisis broke out on July 31.

The total income generated from NSEL last fiscal was largely on account of technology services, which contributes only 4.79 per cent of the total income of FTIL. There is no outstanding amount against the same, it added.

The contribution from revenue generated from NSEL in the net profit of Rs 323 crore was 6.56 per cent.

Given the above facts, the impact on account of NSEL on income and net profit is not material in the standalone financial statement, said Financial Technologies.

IT SEARCH ON BROKER

In a fallout of the NSEL crisis, the Income-Tax Department on Tuesday conducted searches at 20 offices of Anand Rathi Commodities in Mumbai.

The broking firm confirmed that it had facilitated trade worth Rs 641 crore on the exchange platform, which abruptly suspended trading on August 1. The exchange is now struggling to settle trades worth Rs 5,600 crore.

A few days ago, the IT Department conducted survey on the broking firm’s offices in relation to the NSEL scam. The search operation on Tuesday was undertaken after collating some crucial facts from the exchange officials in the survey, said sources in the IT department.

Despite repeated attempts, Anand Rathi officials could not be reached for comments.

NSEL defaults on settlement again

The crisis-ridden National Spot Exchange has managed to collect only Rs 15 crore from investors against the requirement of Rs 174 crore, defaulting trade settlement for the sixth time in a row. The exchange has recovered Rs 9 crore from Topworth Steels by cashing fixed deposit and bank guarantee provided by the company.