PwC resigns as auditor of Financial Software

Price Waterhouse Chartered Accountant (PwC) has resigned as the auditor of Financial Software and Systems (FSS) due to differences with the management on disclosures relating to the application for a new umbrella entity (NUE), according to a rating report by Care Ratings.

The company has appointed S Vishwanathan as the new auditor, Care Ratings said in its latest ratings report. The ratings firm assigned a 'BBB' rating on the company's ₹714 crore loans and placed it under "credit watch" with "negative implications".

FSS had paid ₹8 crore as consultation fee to Boston Consulting Group to provide a business strategy to apply for the NUE licence, which was proposed by the Reserve Bank of India for private entities to set up payment infrastructure. PwC wanted to qualify that in fiscal year 2021, the management had not sought prior approval from the board for this expense item. According to PwC, Care Ratings said, there was a lapse in the company's internal control systems.

FSS management refuted this. The company said the board was subsequently informed about the decision to apply for the NUE licence and related expenses.

The FSS management informed Care Ratings that its board had ratified the expense post facto, and hence the matter did not warrant a qualification by the auditor. Disagreement on this matter led to PwC's resignation, which also caused a delay in the company declaring its annual report for FY21. Nagaraj Mylandla, founder and chairman of FSS, did not respond to ET's request for comment.

FSS is leading the Vishwakarma Payments consortium, which includes Cholamandalam Investments, Zoho, Zerodha, RazorPay, Ujjivan and Airpay, to apply for an NUE licence.