62 Audit Firms of Lucknow swallowed professional opportunity of UP Audit Firm

In an arbitrary and unjustified manner, 62 Lucknow Based Audit Firms have been selected to work for the higher education department through out the State of Uttar Pradesh . The opportunity which was for all the practicing firms of UP was diverted to the limited 62 Firms. It’s simply a repetition of shameful conduct of Mid Day Meal Audits of 2010, when thousands of the audits were swallowed by the few CA leaders /Office Branch of Lucknow Branch.

The Uttar Pradesh Government has decided to go through a verification exercise of Audited statements and budgets of B. Ed Colleges through out the state for the purpose of fixing fee for the colleges. It was to verify the fairness of the Balance Sheets submitted by 1000 odd colleges. The total remuneration stood at Rs. 1.00 Crore.

For the purpose, The Department of Higher Education approached Lucknow Branch for the list of Auditors from whole of the state to complete the job in a short time. Lucknow Branch has referred it to PDC and PDC has submitted the list of 200 Chartered Accountants Firm having three Partners and having 10 year experience. Earlier there was no such condition and there seems to be no justification to select the three partner firm. We are aware that at large Chartered Accountant firms with at least one full time FCA (Partner/Sole Proprietor) can apply for empanelment with C & AG office for allotment of audit of Public Sector Undertakings every year. Was this audit more important than the PSU audit?

But the list sent by PDC never reached the Department. A list of 62 Firms based at Lucknow having three partners with 10 year old standing furnished to the Department of Higher Education. As per news paper item, the Department has issued the appointments to these 62 Lucknow based Firms to audit the 1000 colleges spread over to whole of State of Uttar Pradesh . The Chairman  & Secretary of the Lucknow branch has played a role in to it and it was in their perfect knowledge. There was no direct communication between the PDC and the Department. Mails were routing through the Chairman office of Lucknow Branch. So who is the real culprit is a million dollar question?

Many issues have been cropped up in the said appointment. Some of those are -

1. Why the Lucknow Branch never discussed the issue at any of the Meeting of Branch?
2. Who is a person responsible to set aside the list of 200 Chartered Accountants?
3. Who decided for the 3 partner firm issue with 10 year standing?
4. Is the list generated by PDC was accurate and names of all the eligible firms were there in the list?
5. Why this professional opportunity not placed at PDC site?
6. Will there not be clash of interest and these 62 firms must have signed the Balance Sheets of those colleges?
7. Why a declaration of no clash of interest obtained from the 62 firms?
8. Why these appointments have made in non transparent manner?
9. Why there is always preference to three/ four partner firms though in reality no genuine partnership exists between such firms?

 Will PDC act ?

 

CA AMRESH VASHISHT, FCA, LLB,DISA(ICAI)

Member,ICAI Committee For DIRECT TAXES 2011-12

Member,ICAI Committee For Capacity Building of CA Firms 2010-11