The CAG wanted the discretion for records to be requisitioned to vest with the government or its auditor and wanted the ministry to ensure that RIL provide access to all documents requisitioned
The Comptroller & Auditor General of India (CAG) clarified that it is not planning to do a performance audit of the Reliance but want to examine the ‘propriety’ of the expenses made on the KG-D6 gas block. The clarification follows the suspension of audit of the company’s spending on the prolific gas block on India’s east coast due to differences with RIL over the scope of the audit.
“While a performance audit is not envisaged, it is important that the audit of Block KG-DWN-98/3 (KG-D6) covers examination of all records and documents supporting costs, expenditures, expenses, receipts and income as mentioned in the PSC, including propriety of these expenditure, expenses, receipts and income,” the CAG wrote to oil ministry.
The CAG wanted the discretion for records to be requisitioned to vest with the government or its auditor (CAG) and wanted the ministry to ensure that RIL provide access to all documents requisitioned.
“The purpose of its audit was to ensure that “the Government’s financial interests have been safeguarded,” the CAG wrote on 12th March.
This follows oil ministry writing to CAG saying the official auditor was being requested to undertake the audit of KG-D6 for 2008-09 to 2011-12 under Section 20 of the C&AG (DPC) Act, 1971.
Stating that such audit should be a financial scrutiny, the ministry told CAG that the scope, extend and manner of the audit will be as spelt out in Article 25.5 and 25.6, read with Appendix C of the Production Sharing Contract (PSC) RIL had signed with the government for exploring and producing oil and gas from KG-D6 block.
These provisions of PSC provide for a government appointed auditor inspecting and auditing all records and documents supporting costs, expenditures, expenses, receipts and income.
It calls for verifying reasonableness of all charges and credits, which constitutes a pure financial audit.
CAG said it was in agreement with this scope of audit provided the ministry agreed with it on the issue of requisition of records and access.
The auditor said that its six-member audit team were at premises of RIL in Navi Mumbai from 9th January to 31st January during which they issued 40 requisition calling for information and records.
“However, as of 31st January, the contractor (RIL) had provided only a few records without formal replies stating that they were holding back replies till such time as the points of disagreement were resolved,” it said.
Reebok India in its FIR filed last year had alleged financial fraud to the tune of Rs870 crore by top officials of the company
The Serious Fraud Investigation Officer (SFIO) is finalising its report into the alleged financial irregularities at sportswear maker Reebok India, corporate affairs secretary Naved Masood said on Monday.
“The SFIO is looking at the case more from the technical violations (view) and observance of the corporate law view point... They are finalising the report,” Masood said.
Reebok India in its FIR (first information report) filed last year had alleged financial fraud to the tune of Rs870 crore at the company.
Explaining the reasons for the delay, Masood said, “It is not a question of looking at the delay but looking at all possible issues so that the final outcome is watertight”.
Last year, Reebok India had filed an FIR alleging fraud by its former managing director, Subhinder Singh Prem and Vishnu Bhagat. However, both of them have denied the charges.
Earlier this month, the German sportswear giant Adidas had said its balance sheet for 2011 is negatively impacted by 153 million euros (over Rs1,090 crore) due to “commercial irregularities” at its arm Reebok India Company.
The company had in April last year stated that the estimated maximum negative impact due to the alleged fraud by its two top executives at Reebok India, could be up to a pre-tax amount of 125 million euros.
The DMK party, which has five ministers in the Union Cabinet, are expected to put in their papers shortly