Is Reliance communication going to be next Satyam?
The government-appointed auditor
Parekh & Company is understood to have revealed that Reliance
Communications (RCOM), the flagship company of the R-ADAG group, has inflated
the company’s revenues by Rs 2,915 crore in 2007-08 and also evaded licence fee
of Rs 315 crore. An RCOM official termed the disclosures revelation as biased.
“It appears instigated by corporate rivals,” he said and added “RCOM is in full
compliance of licence terms and conditions.”
When contacted, department of telecom (DoT), senior officials confirmed receipt
of the report by auditors Parekh & Co and said that it is yet to examine
the findings. However, he refused to comment. In January 2009, the government
had appointed a special committee to audit RCOM account. Subsequently, it
appointed special auditors for all the major telecom operators. DoT is awaiting
the report of four other companies - Tata Tele, Bharti Airtel, Vodafone and
Idea - from the respective auditors.
The report of Parekh & Co submitted to DoT found that for FY08 actual
wireless revenue earned by the company was only Rs 12,298 crore as against Rs
15,213 crore reported to the shareholders, which is an over reporting of Rs
2,915 crore. It also found that RCOM evaded licence fee and spectrum fee of Rs
315 crore.
The
auditors stated that the consolidated wireless revenues reported in
consolidated financial statement (CFS) include an income of Rs 617 crore from
sale of debts (already written off) to a group of companies.
“This transaction is financial in nature and is not wireless revenues earned
during the period from provision of wireless services to subscribers in India
and would have been already accounted as wireless revenues in the year in which
the debtors were created resulting in the same revenues being accounted as
wireless revenues twice in two different accounting years,” the auditors have
reportedly qualified in its report.
Auditors said although it’s still early to comment, if even partially true, it
will project a bad picture for auditors.
“The industry is yet to recover from the Satyam fraud, where the role of the
auditors is still being investigated. This audit report, which indicts KPMG
(BSR & Co) and Chaturvedi & Shah for overlooking irregularities, will
invite strict action from the government,” said a senior auditor, who has
audited the accounts of some of the country’s largest companies.
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