Deloitte resigns as auditor for DHFL

Deloitte Haskins and Sells has resigned as auditor of DHFL after it failed to get sufficient information and explanation to their enquiries and expressed concern over Rs 5,653 crore inter-corporate deposits (ICDs). It said that it failed to get information in relation to credit, legal and technical evaluation and evidence for end use monitoring of project loans and mortgage loans aggregating Rs 24,07,772 lakh. The audit firm found significant deficiencies in the grant and rollover of inter-corporate deposits. The firm cited non-availability of evaluation of credit worthiness of borrowers, commercial rationale forming the basis of granting of the ICD of Rs 5,653 crore, but noted that DHFL is working towards correcting these deficiencies and that no adjustment is required to the carrying value thereof. DHFL has incurred Rs 1,036 crore losses during the year and has net current liabilities of Rs 755 crore as on March 31, 2019. The company's credit rating reduced to 'default grade' subsequent to the year-end which may substantially impair its ability to raise or generate funds to repay its obligations.