Krishnamoorthy & Krishnamoorthy to be new statutory auditors
By CL Jose
KANNUR/September 28-2022: Deloitte Haskins & Sells LLP, has resigned as the statutory auditors of Kannur International Airport Ltd (KIAL), leaving midway of their contract valid until 2023-24.
KIAL is convening its annual general meeting (AGM) on October 26 to consider the annual report for the financial year 2021-22 and to ratify other proposals to be placed before the shareholders.
It was following the AGM of the shareholders held on January 19, 2019, KIAL appointed Deloitte Haskins & Sells as its statutory auditors on March 28, 2019 for a period of five years, i.e., from financial years 2018-19 to 2022-23.
Deloitte Haskins completed audit for three years ie, from FY18-19 (FY19) to FY 2020-21 (FY21).
“They submitted their resignation expressing their unwillingness to continue with the audit for the remaining two years stating that the audit fees fixed earlier does not commensurate with the incremental efforts required due to new reporting requirements consequent to changes in the prevailing laws as applicable for the year ended March 31, 2022,” a KIAL statement explained.
On August 04, 2022 the KIAL board accepted the resignation and decided to appoint Krishnamoorthy & Krishnamoorthy, Chartered accountants, as the new statutory auditors of the company.
The appointment of Deloitte Haskins as KIAL’s statutory auditor marks the peak of a stand-off between the Kerala Government and Comptroller and Auditor General of India (C&AG) during 2018-2019 period, where the former argued KIAL was not a government company and hence enjoyed the right to appoint auditors at the will of the company as any public shareholding company.
Kerala Government is the largest shareholder in KIAL with 39.23 per cent shareholding as of March 31, 2021 (FY22 report is yet to be available for businessbenchmark.news).
On the other hand, C&AG stuck to its stand that KIAL was a deemed government company (as government and government entities together own majority shares) by virtue of the shareholding pattern though Kerala government per se didn’t hold majority shares, and hence the appointment of the statutory auditors was C&AG’s prerogative, which it exercised until March 31, 2018 without any dispute.
However, the dispute between the Ministry of Corporate Affairs (MCA) and KIAL on who enjoyed the authority to appoint auditors landed in the court of law.
To cut a long story short, it’s a stay from the High Court of Kerala dated December 3, 2019 through an interim order, paved the way for KIAL to appoint Deloitte Haskins as its statutory auditor some time in 2020.
Adverse Opinion on FY21 financials
But all was not hunky-dory for KIAL on the audit front despite the fact that auditors were of its choice.
Deloitte Haskins had flagged several material weaknesses in the company’s internal financial controls over financial reporting for the financial year 2020-21 (FY21) and has expressed ‘Adverse Opinion’ about the financials, which is viewed as a serious blow to the company’s reputation.
“The company has not maintained adequate and effective internal financial controls over financial reporting, and such internal financial controls over financial reporting were not operating effectively as of March 31, 2021, based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note issued by the ICAI,” Deloitte Haskins had stated while explaining the basis for Adverse Opinion expressed by them on the FY21 financials
