FMC directs MCX to drop Deloitte as auditor

We will abide by any decision taken by the regulator, says Deloitte

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The Forward Markets Commission (FMC) isn’t taking PricewaterhouseCoopers (PwC)’s forensic audit report of Multi Commodity Exchange (MCX) lightly. In the wake of the damning observations by the auditor, FMC has directed MCX to drop Deloitte as statutory auditor.

“We think Deloitte should have detected some of the violations that occurred at MCX,” said an FMC official. A Deloitte spokesperson said the company would respect and abide by any decision taken by the regulator.

Earlier, Deloitte had defended its audit work at MCX, saying the Companies Act and the Securities Exchange Board of India (Sebi)’s corporate governance norms didn’t mandate it to go beyond basic examination of the book of accounts.

“As a statutory auditor, the scope of our work at MCX was to ensure the management made a full disclosure of related-party transactions and whether these were cleared by the board or not. As a forensic auditor, PwC had a wider scope to investigate the entities with which MCX had trade relations,” said a Deloitte spokesperson

PwC’s forensic audit of MCX had revealed while there were more than 670 related-party trades on the platform, the company had disclosed only 235. The special audit report had also highlighted transactions worth Rs 105 crore were carried out with benami entities.