REASONS WHY AUDITORS RESIGN BEFORE THEIR TERM EXPIRY
Channel: R V Seckar
Date: 2020-08-18

REASONS WHY AUDITORS RESIGN BEFORE THEIR TERM EXPIRY 

RESIGNATION OF STATUTORY AUDITOR
Section 140(2) of Companies Act, 2013, deals with resignation of auditor and its related compliance. As per provisions, if any auditor resigns from the company then he shall file an intimation about its resignation with RoC and with the company within 30 days from the date of resignation. Further, in case of Government Company,

FILING FORM ADT-3 BY RESIGNING AUDITOR

In purview of Section 140(2) of the Act, Rule 8 of The Companies (Audit and Auditors) Rules, 2014 requires auditor to file intimation about its resignation with RoC in form ADT-3.
Auditor who resigns from his office of auditor of the company is required to file form ADT-3 within 30 days from the date of his resignation.  Please note that responsibility to file ADT-3 lies with auditor not the company. It is applicable all companies including private limited company. 

A record number of 35 auditors have resigned from NSE-listed firms in the first six months of financial year 2019-20.

MID-TERM CESSATION OF AUDITORS IN NSE LISTED COMPANIES 

CESSATION REASON 2019-2020 April to September 
Pre-occupation  11
Resigned without stating reasons  7
Resigned due to Commercial Reasons 3
Reasons due to unsatisfactory responses to queries  3
Non-payment of dues  1

DELOITTE RESIGNS AS 8K MILES’ STATUTORY AUDITORS, RAISES FRAUD CONCERNS
Deloitte Haskins and Sells has resigned from 8K Miles as its statutory auditors effective November 15,2019 the company intimated to stock exchanges.
“Considering the significance and gravity of the matters, including, inter alia, the concerns relating to revenue recognition, management override of controls, the material weakness noted in the Company's internal financial controls over financial reporting, the management imposed scope limitation on the audit of subsidiaries and providing other information, the non-receipt of the forensic investigation report, etc. as reported by us in our Audit Reports containing a disclaimer of opinion on the standalone and consolidated financial statements of the company for the year ended 31 March,” Deloitte cited as its reasons for resignation.

PRICE WATERHOUSE QUITS AS STATUTORY AUDITOR OF GVK POWER

Price Waterhouse Chartered Accountants LLP on 14 August 2020 announced that it has quit as the statutory auditor of GVK Power and Infrastructure Ltd, alleging that the group was not cooperating in the audit work for their Mumbai airport operations.

INFIBEAM FIRED ITS JOINT STATUTORY AUDITOR
Infibeam, the BSE listed company based in Ahmedabad, on 14 June 2019 appraised the Ministry of Corporate Affairs (MCA) of its decision to sack SRBC and Co as its joint statutory auditor. This comes about a month after the company alleged that the auditor, part of the EY network, leaked sensitive information two years back.
PWC RESIGNED AS RELIANCE CAPITAL AS AUDITOR 
On June 14 , 2019 PwC resigned as Reliance Capital and Reliance Home Finance auditor and shot a letter to MCA alleging divergence of funds in the group companies. In the letter dated June 11 2019, PwC also alleged that the company also threatened legal action, impairing the ability of the auditor. The firm also stated in the letter that it suspected fraud and raised red flags over some transactions involving Reliance Capital and Reliance Home Finance.
Statutory auditors resigned by mentioning the real genuine reason transparently – 
“FEES INCREASE IS NOT AGREED BY CLIENT.”

        SHR & CO , Mumbai , an audit firm resigned as statutory auditor from Gufic Biosciences Private Ltd as auditor of the company. The reason cited by the auditor is as follows:

We have indicated to the Management that our audit fee is not commensurate with the time and efforts involved , hence requested to increase our audit fees which has not been accepted favourably by the Management. In these circumstances , we are unable to continue to act as the Statutory Auditor and hence tendered our resignation as Statutory Auditors of the Company.