PricewaterhouseCoopers to conduct special audit of MCX
Posted Date : 20-Nov-2013 , 10:47:25 am
| Posted By CASANSAAR
The Forward Markets Commission (FMC) on Tuesday approved Price Waterhouse Coopers (PWC) as the auditor to conduct a special audit of MCX and Chokshi & Chokshi chartered accountants to conduct the forensic audit of NSEL’s e-series contracts.
The regulator had asked NSEL to conduct a forensic audit of the e-series contracts following an observation by the Bombay High Court. For this, the regulator had asked the Institute of Chartered accountants of India (ICAI) to suggest four names. But ICAI suggested 99 names, out of which FMC made the selection. T
he audit is crucial because the settlement of 33,000 investors hinges on it. The audit will take six weeks. The MCX special audit could start within a week and is likely to be completed in two months.
E-series contract of the NSEL was actually a delivery contract where in the commodity purchased by the investors was lying in the demat form. As the NSEL suspended trading in that too, these investors had option to get the commodity which was mostly gold and silver converted in to physical form. But an NSEL investors filed a case in the high court urging merger of e-series with other settlement which has increased confusion. This happened at a time when conversion of gold, silver in physical form was getting delayed due to clumsy procedures.
The forensic audit will check whether the money was paid by the buyers and seller had delivered commodity and whether there was any default or settlement guarantee fund was used or not among other issues.
In case of special audit of the MCX, the FMC has approved name of PWC as suggested by the audit committee of the exchange’s board to the FMC. The audit could start within a week and likely to be completed in 2 months’ time. The terms of reference include auditing related party deals. Indian Bullion Merchants’ association (IBMA), a subsidiary of NSEL and national bulk handling corporation (NBHC), a warehousing arm of the FT group had traded on MCX which was not allowed. Now the special audit will study all related party deals.
The FMC has also directed the forensic auditor to review “all individual transactions of expenses incurred above Rs.25 lakh and nature of such expenses, nature of services received and other relevant details to establish genuineness of the expenditure”. The special audit of MCX will include scrutiny of the defaulting members of the commodity exchange since its inception, counter-parties of such members and the action taken by MCX against the defaulters. (Business Standard)