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The audit of Amrapali

Amrapali

An intense courtroom drama has been going on in the Supreme Court, in the case of the Amrapali Group, which claims to be a top real estate builder of Noida and Greater Noida. The matter is before the Supreme Court because its promoters have not delivered the promised flats to 46000 buyers and have siphoned away a sum of Rs.2600 crores, which was received as advances from those cheated buyers. The company directors have been playing hide and seek and have been thwarting the Supreme Court’s efforts to find the trail of funds by which this huge sum of Rs.2600 crores has been siphoned away by the dubious Amprali promoters. The Supreme Court has appointed two forensic auditors to audit the accounts of 46 Amrapali companies for the past ten years to locate the money trail, and the promoters have been non-cooperative and evasive.

In a Sahara style response to the Supreme Court directive to furnish the total accounting records to the forensic auditors, the directors of Amrapali callously dumped forty cartons of unverified and unidentified records, claiming that they have thus given the books of account. An angry and livid Supreme Court, in response to this mockery, has sent the three promoter directors of Amrapali to police custody, directing them to catalogue the records within fifteen days, so that they can be investigated by the forensic auditors, who in turn have been ordered to complete their audit within ten weeks time. The Supreme Court has also sealed all the offices and premises of the Amrapali Group and has issued contempt notices to these over-smart directors.

Since company promoters/directors are prone to delinquency and misuse of public money, statutory auditors are appointed under the Companies Act, to audit the books of accounts/records of the company and furnish their report thereon. They have a serious responsibility because the audited financial statements of a company are relied upon by all its stakeholders since they bear the seal and signature of the auditors. The very fact that the Supreme Court has appointed independent forensic auditors to audit the Amrapali books of accounts/records for a period of ten years, shows its distrust of the regular statutory auditors of Amrapali, who have clearly abetted the wrongdoings of its directors.

 

As more and more cases of corporate fraud/cheating come out in the open, a common feature each time has been that the auditor has been an accomplice in the misdeeds and malpractices of the fraudulent directors. They have been willing mute spectators, which has been responsible for the window dressing of the books of account of ILFS, Yes Bank, Axis Bank and many others. They failed to restrain/check the company directors and also thereafter did not report their misdeeds, which would have been nipped the fraud in the bud if they did so. It is very likely in the case of the Amrapali Group that once the realities of the siphoning of funds is unearthed by the forensic auditors, it is the statutory auditors of the Group, who will be punished by the Supreme Court for their negligence of duty and collusion with the directors of Amrapali.

 

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