Anil Ambani’s Reliance Capital gets a clean chit from the Board on audit violations

• Reliance Capital board took note of views from legal experts and other auditors to conclude that it did not violate any laws.
• PwC quit as company’s statutory auditor alleging that it wasn’t allowed to work independently.
• In June, yet another group company Reliance Infrastructure’s auditor too said that it did not receive enough evidence to complete its audit.

Almost two months after PriceWaterhouseCoopers (PwC) quit as the auditor of Reliance Capital, the company’s Board of Directors gave a clean chit to the management.


In a special review meeting, the board of Reliance Capital took note of views from legal experts and other joint auditors to arrive at the conclusion that it did not violate any laws, as alleged by PwC.


Reliance Capital’s share price closed the day 2% lower and the board decision was announced after market close. The stock has lost nearly half its value since PwC quit as the auditor nearly two months ago. It’s down over 47% since that day.


“The Board also noted that PWC had duly audited the accounts for the financial year 2017 – 2018, as also limited review of financial results of three consecutive quarters ended December 2018, without any qualifications or raising any concerns,” Reliance Capital said in a media release.


On June 11, PwC shot off a letter quitting as the statutory auditor of the company alleging that the company disallowed it from making an independent judgment in its report.


“The PWC letter is devoid of any rationale or basis and is invalid,” RCap said. In its letter, PwC said, “RCap impaired its independence and hence it is no longer in a position to complete the audit and instead feels compelled to withdraw from the audit engagement and resign.”


The dispute started when PwC noted some observations and transactions, which according to its auditor, had to resolved satisfactorily. If not done so, it would be “significant or material” to the financial statements. When it questioned the company, PwC did not receive satisfactory response to its queries.


“PWC had chosen not to attend the audit committee meeting on June 12, 2019 despite being invited to do so. It abruptly resigned at the unearthly hour of 4.32 am on June 11,” RCap said in today’s statement.


However, PwC is not the only company which had found discrepancies in with the highly indebted Anil Dhirubhai Group. In the very same month of PwC’s exit, Reliance Infrastructure’s auditor said that they did not receive enough evidence to complete the audit. Pathak H D& Associates could not find any ‘evidence’ of Rs 8,858 crore which were listed as receivables and inter-corporate deposits like interests and advances.




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