Mumbai: Auditors of Dewan Housing Finance Corporation (DHFL) have raised concerns about the Board approved audited financial results both standalone and consolidated of the company for the fourth quarter and financial year ended March 31, 2019 due to sufficient appropriate audit evidence.
Chaturvedi & Shah and Deloitte Haskins & Sells, independent auditors to DHFL in their report to the board of directors of DHFL said, "We were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the statement accompanying standalone financial results of DHFL.
With regards to the unsecured inter corporate deposits (ICD) outstanding as on March 31, 2019 aggregating Rs 5,652,69 crore, auditors said, "There are significant deficiencies in the grant and rollover of ICD, inter-alia, non-availability of evaluation of credit worthiness of the borrowers, commercial rationale forming basis of granting of the ICD. Also DHFL said that the Company is working towards remediating these deficiencies and that no adjustment is required."
"We have not been provided sufficient appropriate audit evidence to support the management's assessment and hence are unable to evaluate on the recoverability of the ICD and the consequntial effect on the statement (standalone financial results).
Regarding the allegations of fraud made by a news portal alleging diversion of funds, the auditors said, "The report of the independent firm of chartered accountants has not been adopted or approved by the audit committee."
"Also various regulatory authorities/lenders are currently carrying out their own investigation and they may make a determination on whether any fraud or any other non-compliance/illegalities have occurred in relation to the allegations. We are therefore unable to determine if these allegations would have an impact on the financial statement including whether any adjustments to the carrying value of the loans granted, any restatement, related parties and other disclosures and compliances are required," the auditors said.
In respect of certain loans and pass-through certificates (PTC) aggregating Rs 32,452.40 crore and Rs 257.00 crore granted or invested by DHFL during the year and in earlier years and outstanding as at March 31, 2019, the auditors said we have been unable to obtain sufficient appropriate audit evidence to support the values of the loans and PTC and we are unable to determine if these matters would have an impact on the financial statement.
In another matter where auditors said they have not been provided sufficient appropriate evidence to validate the Company's assessment related to the company recognising net deferred tax asset of Rs 442,81 crore as at March 31, 2019.
"The Company is required to perform an assessment as required by Ind AS 12 — 'Income Taxes' which requires the Company to determine the probability of future taxable income to utilize the deferred tax asset. However, we have not been provided sufficient appropriate evidence to validate the Company's assessment about the carrying value of the deferred tax asset and consequential adjustments required, if any, to the Statement, the auditors said....