Sixth auditor exit shows code amiss at Prithvi Information

Mystery shrouds the latest change in auditors of Prithvi Information Solutions. For the sixth time in the last few seasons, the mid-size technology company has appointed a new auditor in P Murali & Company. The mid-financial-year change comes following V K Asthana & Co’s  sudden exit “to the utter shock” of the company’s management.

Most of the previous five auditors — Patwari & Co, Ernst & Young, PriceWaterhouseCoopers, Walker Chandiok and V K Asthana — had also walked out of the company. Asthana exited without endorsing the audit report which it compiled and presented in a USB stick (pen drive) to the company.

In the absence of an endorsed audit report, the company substituted the statutory requirement with a legal opinion sought from C Kodandaram, a senior advocate in the Andhra Pradesh High Court, and S Balasubramanian, former chairman of the Company Law Board.

At a recent annual general meeting, Prithvi’s management informed shareholders that the auditor had quit a few days back and did not provide an approved audit report. Prithvi offered the option of endorsing such accounts to its shareholders, who approved them.

“This is a strange practice. It is a fact that many issues relating to the management of a company are self-regulated though subject to the statute. But, finalisation of accounts too has been done by the shareholders. This could be an interesting precedent if it goes unquestioned by the regulatory authorities,” said a senior Hyderabad-based auditor, seeking anonymity.

Prithvi has accused Asthana of professional misconduct. It is, however, in no mood to complain to professional regulatory bodies such as the Institute of Chartered Accountants of India.