Price Waterhouse & Co Chartered Accountants LLP (PwC), one of the big four audit firms, has resigned as statutory auditor of Reliance Capital Ltd and Reliance Home Finance.
In a similarly worded regulatory filings, both Reliance Capital and Reliance Home Finance said, "The Company does not agree with the reasons given by PWC for the resignation. The Company expected PWC to have participated in the meeting of the Audit Committee and not resigned on the eve thereof. The Company has also duly furnished all requisite and satisfactory details as required by PWC, especially including certification and confirmations of the transactions in question on multiple occasions by PWC themselves."
Reliance Capital, the Anil Dhirubhai Ambani (ADA) group company, says, Pathak HD & Associates will continue as is sole statutory auditor until the conclusion of its annual general meeting (AGM) for FY20-21. The audit committee and board of Reliance Home Finance are meeting on 13 June 2019 to decide upon the new statutory auditor for the company.
Earlier, in a letter, PwC had alleged that Reliance Capital disputed observations highlighted by the audit firm and did not convene an audit committee meeting within the expected time. "PWC has stated that as part of the ongoing audit for FY2018-19, it noted certain observations or transactions which in its assessment, if not resolved satisfactorily, might be significant or material to the financial statements, and that it did not receive satisfactory response to its queries."
"PWC has further stated that though it sent a letter dated 24 April 2019 under relevant provisions of the Companies Act, Reliance Capital disputed the same to be in accordance with the provisions of law, notwithstanding a subsequent letter issued by PWC on 14 May 2019 to reiterate the intent of letter issued on 24 April 2019, and the Company did not convene an audit committee meeting within the expected time. Reliance Capital also stated that it might initiate appropriate legal proceedings against the firm. According to PWC, these actions by the Company have prevented it from performing its duties as statutory auditors and exercising independent judgment in making a report to the members of the Company, and impaired its independence, and hence, it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign," PwC had said in a statement shared by Reliance Capital in its regulatory filing.
Reliance Capital, however, has rejected the contention of PwC. It says, "The Company has duly responded to the various queries and letters of PWC and has also duly and validly convened a meeting of the Audit Committee on 12 June 2019 to further respond to the letter dated 14 May 2019 from PWC."