NEW DELHI:
(Source: The Times of India, June 12 2012)
Global audit major KPMG will face questions from the Serious Frauds Investigation Office (SFIO) in connection with the Rs 870-crore alleged fraud at Reebok India, corporate affairs secretary Naved Masood said on Monday. While Delhi-based N Narasimhan & Co was the statutory auditor of Reebok India, a forensics team from KPMG had also been tasked in 2010 by the German company to probe any instance of financial irregularities in its Indian subsidiary by its senior executives. KPMG is also global auditor of Adidas. It is believed that KPMG forensics report had given a clean chit in its findings.
Masood said the SFIO inquiry will look into the overall alleged fraud in the company and the role of KPMG will also be covered as part of this. "The SFIO is expected to look into the entire issue. With regards to KPMG, they will broadly look into three issues — whether it is a fact that KPMG had given a clean chit in its forensic report; if so, whether this should have been given; and lastly, if wrongly given, whether anything happened that led to this," Masood told TOI.
However, he refused to divulge specifics of the investigation. "It has been just been a couple of days since the SFIO got the investigation mandate. We have to give them some time before anything definitive can be spoken on the matter." When contacted, a spokesperson for KPMG in India said the firm cannot comment anything on the issue as a government probe is already on.
The economic offences wing (EOW) of the Gurgaon police department is also understood to have questioned officials of KPMG India over the matter. Auditing regulator Institute of Chartered Accountants of India (ICAI) is also looking into the alleged scam, especially with regard to the conduct of the statutory auditor. However, the ICAI probe is not expected to cover KPMG as forensics is a consulting assignment and not an auditing process.
Corporate affairs minister Veerappa Moily said the SFIO is likely to wrap up its probe over the next four months. The step was taken after a non-invasive scrutiny of the books of accounts of the sportswear maker. The report of the non-invasive scrutiny, carried out by the Registrar of Companies (RoC), Delhi, has already been submitted to the ministry. Reebok India had on May 22 lodged a first information report (FIR) with the Gurgaon police alleging that its former MD Subhinder Singh Prem and COO Vishnu Bhagat had "stolen" products by setting up "secret warehouses", fudged accounts and indulged in fictitious sales to cause a Rs 870 crore dent to the company. Both Prem and Bhagat had denied the allegations.
In its complaint, Adidas — which owns the Reebok brand — had said that commercial irregularities in India had forced it to take a Rs 870- crore hit, in addition to restructuring spend of Rs 470 crore planned in 2012.
(Source: The Times of India, June 12 2012)
Global audit major KPMG will face questions from the Serious Frauds Investigation Office (SFIO) in connection with the Rs 870-crore alleged fraud at Reebok India, corporate affairs secretary Naved Masood said on Monday. While Delhi-based N Narasimhan & Co was the statutory auditor of Reebok India, a forensics team from KPMG had also been tasked in 2010 by the German company to probe any instance of financial irregularities in its Indian subsidiary by its senior executives. KPMG is also global auditor of Adidas. It is believed that KPMG forensics report had given a clean chit in its findings.
Masood said the SFIO inquiry will look into the overall alleged fraud in the company and the role of KPMG will also be covered as part of this. "The SFIO is expected to look into the entire issue. With regards to KPMG, they will broadly look into three issues — whether it is a fact that KPMG had given a clean chit in its forensic report; if so, whether this should have been given; and lastly, if wrongly given, whether anything happened that led to this," Masood told TOI.
However, he refused to divulge specifics of the investigation. "It has been just been a couple of days since the SFIO got the investigation mandate. We have to give them some time before anything definitive can be spoken on the matter." When contacted, a spokesperson for KPMG in India said the firm cannot comment anything on the issue as a government probe is already on.
The economic offences wing (EOW) of the Gurgaon police department is also understood to have questioned officials of KPMG India over the matter. Auditing regulator Institute of Chartered Accountants of India (ICAI) is also looking into the alleged scam, especially with regard to the conduct of the statutory auditor. However, the ICAI probe is not expected to cover KPMG as forensics is a consulting assignment and not an auditing process.
Corporate affairs minister Veerappa Moily said the SFIO is likely to wrap up its probe over the next four months. The step was taken after a non-invasive scrutiny of the books of accounts of the sportswear maker. The report of the non-invasive scrutiny, carried out by the Registrar of Companies (RoC), Delhi, has already been submitted to the ministry. Reebok India had on May 22 lodged a first information report (FIR) with the Gurgaon police alleging that its former MD Subhinder Singh Prem and COO Vishnu Bhagat had "stolen" products by setting up "secret warehouses", fudged accounts and indulged in fictitious sales to cause a Rs 870 crore dent to the company. Both Prem and Bhagat had denied the allegations.
In its complaint, Adidas — which owns the Reebok brand — had said that commercial irregularities in India had forced it to take a Rs 870- crore hit, in addition to restructuring spend of Rs 470 crore planned in 2012.
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