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Tata Fin report under regulators' lens

BS Bureaus in New Delhi

A F Ferguson's withdrawal of its report on the affairs of Tata Finance has come under the scrutiny of regulators, with both the Securities and Exchange Board of India and the Institute of Chartered Accountants of India saying the matter will be looked into.

ICAI president Ashok Chandak said the institute was looking into the matter to ascertain whether there was a lapse on the part of the auditors.

"We are trying to gather information. If the auditor has erred in discharging its duties, action will be taken. The institute will not shy away from taking action," he said, adding that so far the institute did not come across any evidence of a lapse on the part of A F Ferguson.

However, it seems this isn't the end of the withdrawn report. As per ICAI guidelines, there is provision for a revised report to carry the observations of the old one, along with the comments of the auditee and explanation of how these comments have been dealt with.

Although the event is without precedent, Chandak said it was possible even for a final report of the auditor to be revised. "Even after the final report has been submitted, it is possible that the new facts that come to light are so materially different that a re-investigation is required," he said.

Sebi said it might examine the issue of A F Ferguson's decision to take a fresh look into the affairs of Tata Finance. "We came to know of the report only today. We might examine the issue," Sebi chairman G N Bajpai said after delivering a lecture at the commerce department of Delhi University.

On August 2, A F Ferguson wrote to Tata Finance saying it was withdrawing the report. It decided to appoint a fresh team to look into the issue. It even returned the payment it had received for the probe ordered by the Tatas in May last year.

On the issue of Ferguson returning the cheque for Rs 9.5 million, which it had received as part-payment for the report, Chandak said the rules laid down by ICAI provided that no accountant could accept payment in advance.

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