Whats your take (as an investor) on Deloitte and KPMG Fraud

Lets say you are an investor who wants to invest in a company A Ltd, you look at the financials of the company and you see that it has tremendous profits over the last few years.

So you invest your hard earned money in A Ltd.

A year later A Ltd files for bankruptcy.

You may ask what went wrong, in reality the financials of the company were tailored and it was actually suffering from huge losses.

This hadnt happened if the financial statements were audited by an independent auditor.

This is what auditing is important, it enables you to have a clear view of the financial statements and make an informed investment.

What if I tell you that your hard earned money is not in A ltd but IL &FS and the scope of Audit is violated by none other than the major players in auditing field, Deloitte and KPMG.

In the IL&FS fraud case, Rs.90,000crores scam, that caught India unawares a few months ago the after-effects of which are still being felt in many spheres.

India detected at least 22 violations of auditing standards by Deloitte Haskins & Sells and a KPMG affiliate while investigating a fraud at a financial company, leading it to seek a five-year banon the auditors, according to government.

After the government took over IL&FS, federal investigators began looking into one of its key financial units, IFIN, which was audited by Deloitte between 2008-09 and 2017-18, and by a KPMG affiliate, BSR & Associates, from 2017-18.

The auditing firms gave clean audit reports and “deliberately” failed to report fraudulent activities to which both auditors have denied wrongdoing and IL&FS did not respond to a request for comment.

“Simply put, the fraud committed at IFIN is nothing short of organised crime, actively aided and abetted by the statutory auditors,” said the ministry filing.

The National Company Law Tribunal (NCLT) asked Deloitte and the KPMG affiliate to file their responses on the allegations, set June 21 as the hearing date to which there is not any required update.

The government has urged the tribunal to impose a five-year ban on the two auditors. It has also sought to bar the accounting firms from selling any of their properties while the case is heard, legal filings showed.

The IL&FS crisis has since last year spooked stock markets and cast a pall over on India’s shadow banking sector, which comprises of more than 10,000 firms with a combined balance sheet of about Rupees 2,09,60,89,12,00,000.

“IFIN may only (be) the tip of the iceberg, as the rest of the IL&FS Group companies are still under investigation,” the government filing said.

In the event of such a ban, Deloitte will join the ignominious league of Price Waterhouse (PWC) which SEBI debarred from auditing listed companies and market intermediaries for two years in the Satyam fraud.

So What now

Whats your take on this Will such major players be banned As there is no recent update regarding this

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