Auditors make 10 critical comments on Metropolitan Stock Exchange
PrintListen to this Article
The auditors of Metropolitan Stock Exchange (MSEI) have made 10 critical comments, including the practice of preparing the financial statements on ‘on going concern’ basis (an assumption that the entity will not be forced to halt operations and liquidate assets in the near term), even though its networth has been substantially eroded due to losses incurred and not carrying out the impairment testing to ascertain the carrying value of fixed assets.
However, the exchange in the annual report justified its stance on all the comments, including the accounting practice of ‘on going basis’ saying its net worth is well above the regulatory requirement of ₹100 crore and it has raised fresh capital of ₹74 crore through a rights issue, besides working to reduce operational costs and improve revenue.
The annual general meeting of the exchange is scheduled for September 30 in Mumbai. For the financial year ended March 31, the exchange trimmed its losses to ₹60 crore, against losses of ₹154 crore incurred in the same period last year.
The auditors feel that the board of directors is not duly constituted with proper balance of public interest directors (PIDs), managing director and shareholder directors.
3 categories of directors
The exchange said according to SEBI regulation, the company could have only three categories of directors public interest directors, managing director and shareholder director.
After resignation of two shareholder directors in the previous financial year, the company had been making efforts to replace them. However, it was unable to do so as most of its shareholders were trading members or affiliates of trading members who were not eligible to propose shareholder directors in terms of the regulations, it said.
Since the exchange’s shareholding base comprise trading members or those having some association with trading members, it could not appoint a shareholder director, said the annual report.
Complying with norms
The exchange clarified that it appointed Pankaj Talwar as shareholder director subject to the approval of shareholders and SEBI, and is in the process of appointing one more shareholder director to comply with the regulation.
The auditors have also observed that the Managing Director (Saurabh Sarkar) was paid remuneration of ₹1.81 crore a year annum which was ₹6 lakh in excess of ₹1.75 crore remuneration approved by the directors, SEBI and shareholders.
The exchange said the remuneration of ₹1.81 crore paid to Sarkar includes ₹19.16 lakh paid to buy out the notice period of his previous employer (United Stock Exchange) to relieve him early and join the exchange. This payment was erroneously shown as remuneration instead of recruitment cost, the exchange clarified.
Category : Auditing | Comments : 0 | Hits : 962
In a boost to the National Financial Reporting Authority (NFRA), the regulator for auditors and audit firms dealing with large and listed companies, the Supreme Court has upheld an order by the National Company Law Appellate Tribunal (NCLAT) related to disciplinary action against errant auditors. Last month, the apex court dismissed an appeal filed by chartered accountant Sam Varghese, partner at K Varghese & Co. Varghese was one of the four auditors against whom NFRA had acted, and in...
Hindustan Unilever Ltd. has announced that its cost auditor has been disqualified from continuing amid a conflict of interest. The decision was made after it was discovered that Rasesh Vipin Chokshi, who is a partner at the firm R.A. & Co., was holding shares in the company. According to the Companies Act, 2013, a cost auditor cannot hold any shares in the company for which they're auditing the costs. Following this violation, M/S R.A. & Co. has been asked to vac...
The Bombay High Court has granted bail to Anita Kirdat, a former concurrent auditor of the Punjab and Maharashtra Cooperative (PMC) Bank, in connection with a multi-crore loan fraud case. Kirdat, 48, a chartered accountant (CA) from Bhandup, who runs a firm, Anita Kirdat and Company, was arrested by the Economic Offence Wing of Mumbai Police in 2019 in the PMC Bank scam. She served as the concurrent auditor of PMC Bank from 2005 to 2019. She was alleged to have been appointed at the behest...
Tighter regulations and lower fees are making the auditing profession challenging, said panelists at an international conference held by the National Financial Reporting Authority (NFRA) here on Tuesday. “The business model of pure audit is under significant pressure. It’s getting tighter and tighter from the point of avoiding conflict,” said Uday Kotak, former managing director and CEO of Kotak Mahindra Bank. Stating that regulators would want the best of talent in the audi...
The Comptroller and Auditor General of India (CAG), Girish Chandra Murmu, on Friday announced the setting up of the Supreme Audit Institution India’s International Centre for Audit of Local Governance (iCAL) in Rajkot, Gujarat. At the conclusion of the three-day international conference on ‘Strengthening of Grass Roots Democracy and Accountability’, Mr. Murmu said local governments played a pivotal role in shaping the lives of citizens. Effective accounting platforms and aud...
Comments