NFRA to Look into Alleged Accounting Irregularities at Infosys
Image Courtesy: The Pioneer
New Delhi: In mounting woes for Infosys, the government has asked the National Financial Reporting Authority (NFRA) to look into alleged accounting irregularities at the IT major in the wake of whistleblower complaints, a senior official said on Thursday. NFRA comes under the Ministry of Corporate Affairs.
A senior government official told PTI that NFRA has been asked to look into alleged accounting irregularities and related unethical practices.
NFRA, the independent regulator for the auditing profession, can take up cases on its own or on the direction of the ministry.
On Monday, Infosys informed stock exchanges about anonymous whistleblower complaints alleging certain unethical practices.
In a letter, dated September 20, and signed by 'Ethical Employees', it was alleged that CEO Salil Parikh as well as Chief Financial Officer Nilanjan Roy engaged in forced revenue recognition from large contracts without adhering to accounting standards.
The letter, addressed to the board, claimed that recent big deal wins carried negligible margins and that Roy directed certain people to make wrong assumptions to show margins.
Against this backdrop, the company has also come under the lens of markets regulator Securities and Exchange Board of India (SEBI) and US Securities and Exchange Commission.
"The company has been in touch with the SEC regarding the anonymous whistleblower complaints (anonymous complaints) and has learnt that the SEC has initiated an investigation into this matter. The company will cooperate with the SEC's investigation," Infosys said in a statement on Thursday.
SEBI has requested additional information from the company concerning the anonymous complaints, and Infosys will provide the information as per its request, it added.
The IT major also said that it was "aware of a securities class action lawsuit" that had been filed against the company in a federal court in the US based on generalised allegations in the anonymous complaints. "The company intends to defend itself vigorously in such a lawsuit," it added.
US-based Rosen Law Firm had said it was preparing a class action lawsuit to recover losses suffered by Infosys investors in the US.
The complaints have been placed before the audit committee as well as the non-executive board members.
On Tuesday, Infosys Chairman Nandan Nilekani said the audit committee had retained law firm Shardul Amarchand Mangaldas & Co to conduct an independent investigation into the issue.
Leading exchange BSE, on Wednesday, asked Infosys to explain why it did not make a disclosure about the whistleblower complaint.
Shares of the company closed 2.36% down at Rs 635.40 on the BSE.
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