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Infibeam To Terminate Relationship With EY’s Audit Unit Citing Data Breach

Infibeam To Terminate Relationship With EY’s Audit Unit Citing Data Breach

Infibeam informed stock exchange about its plans to terminate audit company SRBC & Co LLP

Infibeam alleged that the audit company has been sharing confidential information with third parties

The auditor has denied all the allegations

Ahmedabad-based ecommerce company, Infibeam Avenues, has recommended termination of its auditors, SRBC & Co LLP,  an arm of the global accounting major Ernst & Young, alleging that the organisation was sharing confidential information.

While informing the stock exchange(s), the company said that the audit company has been sharing the company’s Unpublished Price Sensitive Information (“UPSI”) with personal email accounts of their team and third party on multiple occasions, leading to a breach of trust.

Therefore, Infibeam has issued a notice of termination to the auditor upon receiving approval from the board of directors.

“Company, on receipt of anonymous third party information shared its preliminary findings to the Auditor where Company UPSI had been shared by the Auditor to the third party and personal email accounts of their team on multiple occasions which has been since verified and confirmed by the Auditor pursuant to internal investigation. Upon receipt of the investigation report from the Auditor, the Board of directors of the Company had given sufficient opportunities to the Auditor of being heard,” Infibeam stated.

However, in response to Infibeam’s allegations, the investigation team of the auditor said that there are no technical means to verify that there was no further sharing/distribution of Company UPSI sent to personal accounts and the third party.

The company board was not convinced by the auditor’s explanations, processes and conduct leading to unauthorized sharing of company’s sensitive data.

According to reports, the auditor has denied all the allegations and also told PTI that the company is open to an investigation.

In light of this issue, Infibeam has also summoned an extraordinary general meeting of the shareholders on May 30.

Infibeam was founded in 2007 by Sachin Dalal, Vishal Mehta and Neeru Sharma. It provides end-to-end ecommerce payments solutions to small and large merchants, enterprises and government.

The company is also the first ecommerce company in the country to be listed with SEBI (Securities and Exchange Board of India) after it received an approval to raise $69 Mn (INR 450 Cr) through an initial public offering (IPO).

In October 2018, Infibeam experienced a 71% fall in its share price after a fake message spread through WhatsApp questioned the company’s accounting policies and corporate governance.

Infibeam, which also runs payments processing services CCAvenue, had recently announced that its Dubai-based wholly owned subsidiary Infibeam Global EMEA FZ-LLC signed a memorandum of understanding (MoU) with Middle East’s investment firm UniPropitia FZCO,  to expand its web service platform in the Arab League countries.

In February, the company reported a net profit of INR 26.6 Cr ($3.6 Mn) for the quarter ended in December 2018, as compared to INR 1.9 Cr ($266K) in December 2017. The total revenue of the company more than doubled to reach INR 150.3 Cr ($21.09 Mn) for the quarter as compared INR 73.6 Cr ($10.3 Mn) in the last year.

Mounting Troubles For Big Four Accounting Firms

This revelation comes in at a time when all the four global accounting giants are facing troubles in India.

Recently, Business Today reported that all the four accounting companies namely KPMG, PwC, Ernst & Young and Deloitte India were pulled up by Delhi Bar Council. The council has issued notices to these companies barring them from practising law until further orders.

The order came after Lalit Bhasin, President of the Society of Indian Law Firms filed a complaint stating that the companies are accounting organisation but are engaged in law practice.

While KPMG and Deloitte India have responded to the notices, E&Y and PwC have six weeks and four weeks, respectively to respond. The next hearing is scheduled on July 12.