PwC plans to give up Reliance Energy audit

Move part of global policy of not undertaking joint audits

Global professional services firm PricewaterhouseCoopers (PwC) will not take up the audit assignment of Reliance Energy for 2005-06.

According to sources, PwC's decision to sever its two-year old relationship with Reliance Energy follows its global policy of not taking up audit assignments jointly with other firms under normal circumstances.

PwC has been associated with Reliance Energy as one of the statutory auditors for past two years. The other auditors of Reliance Energy are Haribhakti & Co. and Chaturvedi & Shah.

Sources close to Reliance Energy said the board of the company has not yet decided on whether it will continue with its other two auditors or induct a third one. "The board will take a decision on this shortly," sources said.

Sources in the auditors circle the company may rope in Ernst & Young in place of PwC. Industry sources said PwC may give up audit assignments of companies where more than one auditors are engaged, if it follows the policy of going solo.

However, there are extraordinary situations where the policy of going solo can be relooked. These include countries such as France or industries such as insurance where joint auditors are a must.

Recently, Reliance Energy has been asked to produce a bank guarantee of Rs 300 crore by the Dahanu Taluka Environment Protection Authority for setting up a flue gas desulphurisation plant at its Dahanu Thermal Power Station.

The company has been accused of delaying the setting up this unit by environment groups and citizens in Dahanu, which is on the outskirts of Mumbai.

The area is considered an ecologically fragile zone and environment groups have been arguing since 1994 that emissions from the plant affect its agriculture and horticulture.