‘Policy on client acceptance’ prompts Deloittee to quit as DHFL auditor

Deloitte Haskins & Sells, an affiliate firm of Deloitte India, has resigned as the co-auditor of the cash-strapped Dewan Housing Finance Limited (DHFL), an exchange release by the company said on Tuesday.

DHFL, in its statement, said, “the reasons cited by Deloitte Haskins & Sells LLP are that in view of the matters stated in the Disclaimer of Opinion in the Financial Statements of the Company for the year ended on 31st March 2019 issued by them and its consequential effect on reporting under the Companies Act, 2013, their firm's policy on client acceptance and continuation does not permit them to continue as statutory auditors of the company.”

In the audited results for the January-march quarter of FY2019 released on July 22, the auditors noted in the ‘Disclaimer of Opinion’ section that “there are significant deficiencies in the grant and rollover of inter-company deposit (ICD), inter-alia, non-availability of evaluation of credit worthiness of the borrowers, commercial rationale forming basis of granting of the ICD. The note also states that the company is working towards remediating these deficiencies and that no adjustment is required to the carrying value thereof. We have not been provided sufficient appropriate audit evidence to support the management’s assessment and, hence, are unable to evaluate on recoverability of ICD and the consequential effect on the (financial) statement.”

Deloitte and Chaturvedi & Shah are joint auditors of DHFL, and with Deloitte submitting its resignation, the company said it had initiated talks with reputed audit firms for appointment as statutory auditors subject to necessary approvals by the Audit Committee of the Board/Board of Directors, and the shareholders.