Deloitte issues qualified opinion on FY22 accounts of IndoStar, CFO News, ETCFO


IndoStar Capital Finance’s auditors, Deloitte Haskins and Sells LLP, issued a qualified opinion on the lender’s FY22 and Q4FY22 accounts. In accounting jargon, a qualified opinion is a statement certified by an auditor that a client’s financial statements are presented fairly, except in a specified area.

IndoStar released financial results for the fourth quarter of FY22 and the full year of FY22 on Saturday; it had postponed the results following a third-party audit by EY into its SME and CV loan portfolio which had been launched after its management discovered some control deficiencies in March.

IndoStar informed exchanges EY has submitted its final report, but it has additionally appointed another outside law firm to determine the root cause analysis of deficiencies in internal financial controls, the report of which is expected to be completed by September, he said.

“According to the information and explanations provided to us, the external law firm has not submitted its conclusions relating to the conduct examination indicated above to the audit committee of the company. In addition, the Group has concluded that it is not possible to determine the prior period specific effects, if any, of the impairment provision, loan assets written off and changes in the fair value of financial guarantee contracts recorded during the quarter. and the year ended March 31, 2022…,” Deloitte Haskins and Sells LLP said in its audit report while giving the basis for a qualified opinion.

The EY report

In a separate disclosure on Saturday, IndoStar shared that the findings of EY’s final report were the same as those disclosed by the company in its May 6 disclosure. On May 6, IndoStar revealed that EY, in its preliminary findings, found deviations from the company’s credit policy in existing customer loan approval processes and waivers in foreclosure cases. in the case of certain loans. In addition, for the restructured loans, EY found that IndoStar did not follow the steps described in the description of the control. “In this regard, it is likely that the company will be required to make additional estimated credit loss (ECL) provisioning between INR 557 crore and INR 677 crore,” IndoStar said at the time.

As of March 31, 2022, IndoStar’s gross loan balances related to VC and SME loans were Rs 4,484 crore and Rs 1,535 crore, respectively out of total gross loans of Rs 7,607 crore.

Material uncertainty

IndoStar has further disclosed in its notes on the material uncertainty related to going concern. It recorded a second straight year of losses as its finances came under severe strain due to the Covid-19 pandemic. Its losses jumped to Rs 736 crore in FY22 from Rs 214 crore the previous year. Furthermore, IndoStar’s total liabilities exceed total assets maturing within 12 months by Rs 220,604 lakhs as of March 31, 2022, end.

IndoStar is currently without a CFO; its last CFO left the company on July 19, within two months of his arrival.


Comments are closed.