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The Forward Markets Commission (FMC) has directed Multi Commodity Exchange (MCX) to check the audit work done by its statutory auditor Deloitte in recent years, sources say. MCX has been asked to ascertain by the regulator whether there were discrepancies at the commodity exchange that could have been observed and reported by Deloitte.
Deloitte was appointed by MCX as the statutory auditor after it went public in 2012.
PricewaterhouseCoopers (PwC), after receiving the mandate from FMC to conduct forensic audits on MCX, raised several questions over the surveillance of the exchange. FMC while issuing its directions to MCX has stated that Deloitte might have seen some traces of violations of the FCRA law, which should have been reported.
Deloitte had said earlier that the work of a statutory auditor is to check for related-party transactions and whether they have been cleared by the board. FMC had recently informally suggested to MCX to drop Deloitte as a statutory auditor after the findings of the PwC forensic audit report.
Deloitte had defended its audit work at MCX, saying the Companies Act and the Securities Exchange Board of India (Sebi) corporate governance norms didn’t mandate it to go beyond a basic examination of the books of accounts. Deloitte had said, “As a statutory auditor, the scope of our work at MCX was to ensure the management made full disclosure of related-party transactions and whether these were cleared by the board or not. As a forensic auditor, PwC had wider scope to investigate the entities with which MCX had trade relations.”
FMC has also initiated an internal review of the audit which has was done by the regulator at other commodity exchanges including NCDEX, ACE, NMCE and UCX.
