Bharatpe will bring PwC once the investigation is widened

The appointment of PwC is in addition to Alvarez & Marsal (A&M), but the scope of the auditor’s investigation is slightly different, said a person with direct knowledge of the matter.

“PwC is in the final stages of looking into the transactions of the fintech firm and verifying the company’s internal investigation. The company’s internal findings of alleged financial irregularities are being placed before both PwC and A&M,” said the person requesting anonymity.

On 29 January, Mint reported that BharatPe’s board had decided to terminate the services of co-founder and managing director Ashneer Grover.

The decision is reportedly based on a preliminary internal investigation that has indicated signs of financial fraud.

A spokesperson for PwC said, “As a policy, PwC does not comment on any specific company, and therefore, we will not be able to answer your question.”

As a result of the ongoing third party investigation, only a few concerned officials are being called to the Malviya Nagar office in Delhi.

“BharatPe office is open at 50% capacity as per COVID protocol. A BharatPe spokesperson said in an emailed response, “All employees are allowed to come, based on the COVID policy and their work rotation schedule.”

“The company will not comment on other speculations until the audit report is complete,” the spokesperson said.

BharatPe’s statutory auditor, Deloitte, may also be questioned as to how it defaulted on alleged financial irregularities, said a second person, who requested anonymity.

“As a statutory auditor, Deloitte was in talks with BharatPe’s financial controller Harsimran Kaur. The last audit by the Big-Four firm was for the financial year ending March 2021,” said this person.

A Deloitte spokesperson declined to comment.

“As the statutory and financial auditors, Deloitte was an external auditor. Following the appointment of Alvarez and Marsal, Deloitte has written to BharatPe’s board asking why such an investigation was needed. It has also sought terms of reference given to auditors to ensure that all relevant questions are being asked to aid in the investigation. Statements were made and information was concealed,” said a third person with direct knowledge of the audit process.

Given that BharatPe, as of FY 2020, had a revenue of 110 crores, it did not require an internal auditor. In the financial year 2021, the revenue was 700 crores.

As per the Companies Act, 2013, internal auditors reporting to the audit head of the company are required only if the revenue of the company exceeds 200 crore in the last financial year.

“Since there was no internal auditor, three people in BharatPe’s management were responsible for the internal investigation and audit. All three were reporting to Kaur.”

Meanwhile, Grover has hired the law firm Karanjawala & Co, which represents Tata Sons in the Supreme Court during his fight with Cyrus Mistry. Karanjawala & Company confirmed the development without sharing details.