Chartered accountants apex body ICAI will review the USD 1.77 billion fraud at Punjab National Bank to look at whether there have been lapses on the part of auditors and has sought information from investigation agencies as well as from markets regulator SEBI. ICAI President Naveen N D Gupta said it has taken suo motu cognisance of the fraud at Punjab National Bank. “The Financial Reporting Review Board (FRRB) has been advised to “initiate suo motu review” of Punjab National Bank and Gitanjali Gems (matter),” he said. The board, set up by the institute, reviews the compliance with various accounting and auditing standards. The institute has written to Punjab National Bank, SEBI, Enforcement Directorate and CBI seeking information on the matter, Gupta, who took over as the President of the Institute of Chartered Accountants of India (ICAI) last week, said. According to an official, the institute would be looking at the role of auditors in these cases to ascertain whether there has been any violation at their end.
The FRRB restricts reviews to the published general-purpose financial statements only and that its work would not be verification of the entire audit (re-audit) or review of working papers of the auditors concerned, as per the ICAI website. In one of the biggest scams in the Indian banking industry, the public sector lender has disclosed $1.77 billion (nearly Rs 11,400 crore) fraud perpetrated by way of fraudulently acquiring Letter of Undertakings (LoUs) of the Punjab National Bank and probe agencies are already investigating the case.
A multi-agency probe is underway against diamantarie Nirav Modi and his relative as well as close associate Mehul Choksi have also come under the scanner of SEBI and stock exchanges. Choksi is the Managing Director of Gitanjali Gems. On Thursday, Punjab National Bank Chairman Sunil Mehta had said it has the capability to recover the dues from Modi and promised to take action against all wrongdoers. In the wake of the fraud, the lender has suspended at least ten officers. The bank detected the fraud in which Modi allegedly acquired fraudulent LoUs from one its branches for overseas credit from other Indian lender.