New Delhi: India’s accounting regulator, the National Financial Reporting Authority (NFRA), has initiated an inquiry against one of EY’s member firms in the country, S.R. Batliboi, which audits certain Adani Group companies, Bloomberg reported, citing people familiar with the matter, on Wednesday (October 25).
According to the report, the NFRA’s inquiry began in recent weeks. The National Financial Reporting Authority has requested documents and communications related to the audits of Adani-controlled companies dating back to 2014, it said.
S.R. Batliboi currently audits five of Adani’s listed firms – Adani Power, Adani Green Energy, Adani Wilmar, and recently acquired cement companies ACC and Ambuja Cements.
It, however, remains unclear how long the NFRA’s inquiry could take or what repercussions, if any, could be faced by the auditor or the audited, Bloomberg said.
Bloomberg News sought comments from the auditor and the Adani Group. Both parties did not respond. A representative for EY and S.R. Batliboi also declined to comment, as per the report.
In August, Deloitte, Haskins & Sells LLP had resigned as the statutory auditors of Adani Ports and Special Economic Zone (APSEZ).
In May, the audit firm had flagged some transactions by Adani Group, citing allegations from US-based short seller Hindenburg Research’s report that wiped off half of the market value of the ports-to-power conglomerate.
In the same month, Ahmedabad-based chartered accountancy firm Shah Dhandharia & Co. – which was named in Hindenburg Research’s report – had resigned as statutory auditor of Adani Total Gas. It told the Telegraph that it had decided to resign “due to increased professional preoccupation in other assignments”.
In October 2022, the Morning Context had reported that two accountancy firms – Shah Dhandharia & Co. and Dharmesh Parikh & Co. – that audit most of Adani Group companies have links to each other, and therefore, raise concerns over the group’s corporate governance.
It further said that Adani Group paid them a little over Rs 7 crore, as compared to Rs 84 crore paid by Mukesh Ambani’s Reliance Industries.
US-based short seller Hindenburg Research, in its January 24 report, had also raised the issue of the size and capability of the firms auditing the Adani Group.
Adani Auditor EY Faces Inquiry by India’s Accounting Regulator: Report - The Wire
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