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USL, controlled by Diageo Plc., said on Wednesday that it had been served notices by the ministry of corporate affairs and the income-tax department regarding its accounting practices, some of which were again questioned by its independent auditor, BSR and Co. Llp.
The maker of McDowell’s No.1 and Bagpiper whiskies made these disclosures as part of its fourth-quarter earnings report in which it showed a net loss of Rs.1,799.28 crore, partly because it was forced to provide cover for money it is supposed to receive from entities controlled by its embattled chairman Vijay Mallya.
“The company has received a notice from the Ministry of Corporate Affairs for an inspection, under 206(5) of the Companies Act, of the books of accounts and other books and papers of the company. A notice under Section 131 of the Income Tax Act, 1961, has also been received. The company is fully cooperating with the authorities in relation to the same,” USL said.
Under section 206(5) of the Companies Act, the central government can appoint an inspector to investigate the books of a company. Section 131 of the Income Tax Act allows the revenue authority to conduct inquiries, summon executives and examine the books and documents of a company
The internal probe that suggested fraud at United Spirits was conducted by accounting firm PwC, which was the company’s auditor in at least one of the years when these activities took place. PwC was USL’s auditor for more than five years until August 2011, and it gave a clean chit to the company’s accounts in these years.
USL said on Wednesday that its previous auditors had written to the company to try and “understand the impact of the findings of the inquiry on their respective audit reports”. Apart from PwC, USL’s other auditor during the period covered by the probe was Walker Chandiok and Co Llp.
According to USL’s internal probe, the alleged irregularities happened between 2010 and July 2013, when Mallya was chairman and Murali CFO. The board then threatened to go to the shareholders to seek Mallya’s removal. Days later, Diageo said it would review its shareholder agreement with Mallya.
United Spirits faces inquiries by regulators into accounting - Livemint
The maker of McDowell’s No.1 and Bagpiper whiskies made these disclosures as part of its fourth-quarter earnings report in which it showed a net loss of Rs.1,799.28 crore, partly because it was forced to provide cover for money it is supposed to receive from entities controlled by its embattled chairman Vijay Mallya.
“The company has received a notice from the Ministry of Corporate Affairs for an inspection, under 206(5) of the Companies Act, of the books of accounts and other books and papers of the company. A notice under Section 131 of the Income Tax Act, 1961, has also been received. The company is fully cooperating with the authorities in relation to the same,” USL said.
Under section 206(5) of the Companies Act, the central government can appoint an inspector to investigate the books of a company. Section 131 of the Income Tax Act allows the revenue authority to conduct inquiries, summon executives and examine the books and documents of a company
The internal probe that suggested fraud at United Spirits was conducted by accounting firm PwC, which was the company’s auditor in at least one of the years when these activities took place. PwC was USL’s auditor for more than five years until August 2011, and it gave a clean chit to the company’s accounts in these years.
USL said on Wednesday that its previous auditors had written to the company to try and “understand the impact of the findings of the inquiry on their respective audit reports”. Apart from PwC, USL’s other auditor during the period covered by the probe was Walker Chandiok and Co Llp.
According to USL’s internal probe, the alleged irregularities happened between 2010 and July 2013, when Mallya was chairman and Murali CFO. The board then threatened to go to the shareholders to seek Mallya’s removal. Days later, Diageo said it would review its shareholder agreement with Mallya.
United Spirits faces inquiries by regulators into accounting - Livemint