The auditor of Financial Technologies -- Deloitte Haskins & Sells -- has said that the company's results for the year ending March 31, 2013 should no longer be relied upon due to the crisis at group company National Spot Exchange (NSEL).
As a result, the company is deferring the passing of three items from its 25th annual general meeting on Wednesday, it said in a release to stock exchanges on Tuesday.
The items include 2012-13 audited results, dividends and re-appointment of Deloitte Haskins & Sells as its chartered accountant.
NSEL, which contributed roughly 56% to Financial Technologies' net profit in 2012-13, is embroiled in a crisis, where it has failed to settle trades worth Rs 5,600 crore. This has led to FT Group and its promoter Jignesh Shah facing the ire of investors, regulators and the government.
Financial Technologies said its stand-alone and consolidated results for 2012-13 will be amended with a revised auditor's report.
"The company……will satisfy the statutory auditors of the company on stand-alone financial accounts though standalone and consolidated financial statements have been audited prior to the event occurred at NSEL," the Financial Technologies release to BSE said.
Deloitte Haskins & Sells said it would not comment on client proprietary matters.
Mukesh P.Shah & Co, which audited the NSEL in the last financial year did not immediately respond to a request for comment. An email went unanswered at the time of writing, while a person who answered at the office telephone number said he was unaware of the development.
Amarjit Chopra, former president of the Institute of Chartered Accountants of India (ICAI), said reports are withdrawn only if the auditor and management cannot agree on a revised report.
"If the auditors feel that events subsequent to the time of the report have serious financial implications then under Standard on Auditing (SA) 560, they are well within their power to withdraw their report. Such an action does not generally take place without a discussion with management," he said.
Chopra said there may be no role played for the accountants' regulator in the issue.
"ICAI would have little role in this unless someone can prove that the auditor was in possession of the information at the time of the original report which does not seem to be the case here. It is for the Sebi (Securities and Exchange Board of India) and the MCA (Ministry of Corporate Affairs) to decide if there is any regulatory action required against other entities," he said.
A partner at one of the 'Big Four' accounting firms said that the auditors of the National Spot Exchange rather than those of Financial Technologies could be the ones facing scrutiny.
"The auditor of the holding company relies on the statement of the subsidiary company's auditors. The responsibility would be that of NSEL's auditors, they could have some questions to answer," said the person.
In a separate press release later on Tuesday, Financial Technologies said the crisis at NSEL surfaced on July 31 after the balance sheet was approved on May 30.
Brokers, who have been critical of the FT Group since the NSEL crisis broke out, continued to lash out at the management.
"It is a complete fraud on FT shareholders. The board kept their eyes closed and corporate governance was just a lip service. The whole board is misfit and improper and it is a new Satyam," said Motilal Oswal, CMD, Motilal Oswal Financial Services.
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