In a recent development, EKI Energy Services, a carbon credits and sustainability solutions firm, has decided to remove statutory auditors Walker Chandiok & Co LLP. The decision was made based on significant concerns raised by the auditors regarding the internal financial controls of the company. Walker Chandiok & Co LLP’s report highlighted the existence of ‘material weaknesses’ within the company’s financial control systems, casting doubts on the accuracy and completeness of its financial statements.
A letter sent to the Bombay Stock Exchange (BSE) by EKI Energy Services confirmed that the board of directors had convened a meeting on July 5, 2023, to discuss the removal of the statutory auditors. The decision was based on the recommendations of the audit committee and followed a reasonable opportunity given to the auditors to be heard.
Further deliberations took place in a meeting on July 13, 2023, where the removal of Walker Chandiok & Co LLP was officially approved by the board of directors. In response, a spokesperson from Walker Chandiok & Co LLP stated that the management of EKI Energy Services had withheld information and explanations on questionable transactions during the audit for the financial year ended March 31, 2023. The auditors communicated their concerns to the audit committee on July 5, 2023, and issued a letter dated July 10, 2023, highlighting the same.
The spokesperson also mentioned that the auditors were appointed in December 2022, and their first Limited Review Report revealed material overstatement of revenues from contracts with customers and profit before tax. They expressed concerns that the proposed removal of auditors by the board of directors was an attempt to hinder their audit procedures and avoid addressing unresolved critical matters highlighted to the management.
Experts suggest that the dispute between the auditors and the company may become complicated due to regulatory restrictions. The Securities and Exchange Board of India (SEBI) does not permit auditors to resign without performing a year-end audit, while the Companies Act prohibits companies from removing auditors without central government approval.
Following the news, shares in EKI Energy Services closed 1.41% down at Rs 462 apiece on the BSE on Friday. The company’s 52-week high was Rs 2,315.
