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India’s NFRA Initiates Inquiry into EY Member Firm Auditing Adani Group Companies

Reports suggest that the National Financial Reporting Authority (NFRA), India’s accounting regulator, has launched an investigation into one of EY’s member firms in India. This particular firm conducts audits for five companies within the Adani group. According to Bloomberg, NFRA has requested access to records and communications related to S.R. Batliboi’s audits of Adani group companies dating back to 2014.

The exact scope and purpose of this inquiry remain undisclosed, as neither EY nor S.R. Batliboi has made official statements regarding the matter. Unofficial sources, however, speculate that this may be a routine audit quality check by NFRA, and other auditors associated with the group might also be under scrutiny, although this is unverified.

In response to these developments, an Adani group spokesperson emphasized their adherence to all applicable laws and regulations in the jurisdictions where they operate, asserting that their business practices, governance, and disclosures are in compliance.

S.R. Batliboi serves as the statutory auditor for five publicly listed Adani firms, including Adani Power, Adani Green Energy, Adani Wilmar, ACC, and Ambuja Cements.

This inquiry by NFRA has once again brought scrutiny to the accounting and disclosure practices of the Adani conglomerate, which has staunchly defended itself against allegations in the past, particularly after accusations made by Hindenburg earlier this year.

S.R. Batliboi had also been the auditor for Adani Ports & Special Economic Zone Ltd for a decade until 2017.

Among other firms within the group, Shah Dhandharia & Co is the auditor for Adani Enterprises.

Hindenburg, a U.S.-based short seller, had previously raised concerns about the size and capability of this auditing firm in its report on the Adani group. The Adani group, however, stood by their choice of auditors, asserting their certification and qualifications by relevant statutory bodies.

S.R. Batliboi resigned as the statutory auditor of Adani Total Gas in May and was replaced by Walker, Chandiok & Co. In August, Deloitte, Haskins & Sells LLP also resigned as the statutory auditors of Adani Ports and Special Economic Zone (APSEZ) after raising concerns about certain transactions involving related parties.

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