DNA Money Edit: Why auditors exit abruptly from firms?

After auditors of Bhushan Steel, Vakrangee and Manpasand Beverages, among others, left abruptly before completing their audit of the annual financial statements a quarter ago, the focus is on Jet Airways now. While in the earlier cases, the auditors decided to hang up their boots as they did not get enough information to complete their audits, Jet Airways decided to defer its June quarter results, though the auditors had not resigned. There is a jump in number of auditors leaving their companies in 2018. Reasons could be as varied as lack of information on the company's businesses, revenues, tax observations, inconsistencies in financials and "health concerns". In most cases, panic-stricken investors have dumped the stocks.

Nearly a decade after B Ramalinga Raju, promoter of Satyam Computer Services, confessed that the company's books had been cooked for several years, there is a greater scrutiny of auditors. Most auditors are cautious about companies that they are getting associated with for the fear of reputational impact and a potential ban.

While the trend of auditors raising concerns to the management is indeed welcome, the recent spate of resignations is definitely a disturbing trend. In cases where the auditors have exited due to lack of adequate information, they convey their concerns to the Ministry of Corporate Affairs. The ministry should examine the recent auditor exits for alleged breach of the law.