Context:
An FMCG company with pan-India presence, which was the flavour of the season, turned sour because of poor Corporate Governance. With Statutory Auditors rapidly moving through the revolving door, should alarm signals not have been seen and acted upon?

• In May, 2018, Deloitte Haskins & Sells, Statutory Auditors of a listed entity, resigned owing to lack of information provided to them by the Company. On the same day, the Company appointed M/s Mehra Goel & Co. as Statutory Auditors.
• The Whole-time Director (WTD) of the Company said in an interview that Deloitte was auditing their books of accounts for approx. 8 years, and had never expressed any concerns on the financial performance, and no information which they sought had been denied to them.
• In July, 2019, M/s Mehra Goel & Co., resigned citing that the firm had policies and procedures to evaluate client continuation on a regular basis. In accordance with this process, and considering the then developments, including action and investigation initiated by the GST authorities in relation to the Company, and the resignation of some of the Directors and the Company Secretary, they had decided to resign.
• In August, 2019, M/s Batliboi & Purohit was appointed as Statutory Auditors for 5 years. In October, 2019, they resigned, with immediate effect, citing that the firm had policies and procedures to evaluate client continuation on a regular basis. In accordance with this process, and considering the then developments of an ongoing litigation among the Board of Directors, and subsequent resignation of some of the Directors and the Company Secretary, they had decided to resign. Also, the audit team members were not allowed to enter the Vadodara factory of the Company for conducting the statutory audit.
• News reports also indicated that the Auditors had found several discrepancies in the Company’s financial statements related to sales, purchases, expenses, GST returns, debtors and creditor accounts, among others.
• In the same month, the Company appointed M/s Bagaria & Co. LLP., as Statutory Auditors. Their report had Matter of Emphasis related to GST searches and investigations. No explanation regarding the Matter of Emphasis or resignations of Auditors was provided in the Annual Report of the Company.