ADAG asks ICAI to penalise RCom auditor

Sequel to denial of special audit findings commissioned by DoT.

The Anil Dhirubhai Ambani Group (ADAG) has registered a formal complaint with the accounting regulator – the Institute of Chartered Accountants of India (ICAI) - against the government-appointed auditor for claiming that its flagship company, Reliance Communications (RCom), had allegedly under-reported revenues and evaded licence fees during 2006-08.

The complaint has gone from Reliance Communications Infrastructure Ltd (RCIL), a subsidiary of RCom, on December 11. The company alleges the special auditor - Jaipur-based Parekh & Co – failed to observe the basic standards of professional conduct while auditing RCom’s accounts as sought by the department of telecommunications a few months earlier.

RCom has already denied the allegations made in the Parekh report and now wants ICAI to take disciplinary action against the auditor. According to sources, the matter was taken up by RCIL as there was a reference to the company in the audit report. The disciplinary committee of ICAI will look into the matter.

“We have received a complaint from Reliance Communications. We have an internal mechanism to look into such complaints”, an ICAI official confirmed.

The special auditor said it found RCom under-reported wireless revenues of Rs 2,799.19 crore to the Telecom Regulatory Authority of India for the financial years 2006-7 and 2007-8, costing the government Rs 315.9 crore in fees (that are charged as a percentage of revenue).

Parekh & Co was appointed by the department of telecommunications (DoT) a few months earlier to examine allegations of licence fee evasion by the Cellular Operators Association of India (COAI), the association of GSM telecom players.

RCom had denied these charges, saying the observations made by the special auditor were completely unilateral, biased and prejudiced. Anil Ambani, ADAG’s chairman, had said the “special auditors had far exceeded their terms of reference and recorded unwarranted and completely incorrect findings on matters beyond the scope of their audit, thereby again demonstrating their bias and prejudice.”