Deloitte did a shoddy due diligence in IL&FS audit, SFIO sources tell media

Deloitte Haskins & Sells did not do enough due diligence in its audit of the books of IL&FS Financial services, a subsidiary of Infrastructure Leasing and Financial Services, Serious Fraud Investigation Office sources told the press recently.
 
According to the sources, Deloitte has been the statutory auditor for the larger group as well as other subsidiaries namely IFIN, ITNL, ISSL among others for the last ten years.
 
“Its annual average audit fee used to be Rs 13-14 crore and advisory and consultancy fee around Rs 6-8 crore per annum. The firm did not audit IL&FS books with due care and professional skepticism. The probe has revealed that the auditors have failed to perform the duties as mandated under The Companies Act,” one of the above mentioned persons told ET.
 
The sources blamed a part of the IL&FS scandal on the audit and credit rating agencies while saying that there’s material evidence to prove that basic transaction analysis tests were overlooked during the course of the audit.
 
“There was lack of due diligence with respect to the loans sanctioned by IFIN. There are instances where non-compliance is apparent and the firm turned a blind eye,” said one of the officials.
 
“As you are aware, there are several ongoing investigations by regulators and agencies. Such agencies are in contact with us being the previous auditors. We have provided full support to their investigations and will continue to do so,” Deloitte spokesperson said, responding to the newspaper.
 
Recently, an anonymous whistleblower came forward and claimed that the audit firm helped fudge accounts of IFIN. In a three page letter, the whistleblower claimed that the audit and tax consultancy firm was aware of the factual situation of the financial mismanagement and impropriety at IL&FS, the newspaper reported.

 


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