IndusInd Brings In Third Audit Firm To Review Derivatives Accounting: Report

IndusInd Bank brought in PricewaterhouseCoopers earlier this year to conduct a review of its derivatives accounting, marking the third major audit firm engaged since the bank began reviewing its treasury processes, The Economic Times reported on Friday, citing a person with direct knowledge.

The private lender had appointed KPMG and EY in early 2024 to assist its internal teams in evaluating treasury policies, procedures and accounting processes. The mandate included a review of its forex derivatives book, which came under scrutiny after a disclosure last month led to a 27% plunge in the bank’s share price overnight.

While EY had no observations on the derivatives policies, according to the bank’s internal audit team, KPMG shared recommendations for changes in the accounting of derivatives based on updated guidance from the Institute of Chartered Accountants of India.

On March 10, IndusInd Bank notified the stock exchanges that it had identified discrepancies in its forex derivatives accounting. In an analyst call, Chief Executive Officer and Managing Director Sumant Kathpalia said the issues were detected around September-October 2024.

Following the disclosure, the bank’s current statutory auditors—Chokshi & Chokshi LLP and MSKA & Co.—wrote to the board seeking a forensic audit of the treasury operations. Grant Thornton Bharat has been brought in to conduct the forensic review and assess how the issue remained undetected for several years.

According to the report, Kathpalia said the discrepancy had persisted since the launch of the derivatives desk, five to seven years ago. A new accounting framework introduced on April 1 prompted a fresh review, which helped uncover the problem.