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IPL Franchisees Come Under ICAI Scanner: Big Trouble Brewing

NEW YORK - AUGUST 20:  United Nations Undersecretary General Shashi Thraroor gives opening remarks at the 2003 U.S. Open Tennis Draw ceremony at the United Nations, Dag Hammarskjold Library August 20, 2003 in New York City.  (Photo by Evan Agostini/Getty Images)
Evan Agostini/Getty Images
Linus FernandesAnalyst IIOctober 27, 2016

There’s more trouble brewing for the BCCI’s cash-cow, the Indian Premier League (IPL).

The IPL has been mired in controversies over the past year.

The Twitter spat between Lalit Modi and Shashi Tharoor was the spark that triggered a conflagration of sorts; IPL shenanigans were tabled on the floor of Parliament.

Media darling Tharoor was forced to resign from his position of Ministry of External Affairs (MEA).

The BCCI, none too pleased with Modi’s perceived high-handedness, evicted him from his IPL commissioner’s office.

A wide-ranging probe into the workings of the IPL saw the Income Tax authorities investigating charges of tax evasion by franchisees; the Enforcement Directorate is simultaneously tracking the trail of foreign money funding the franchisees.

Now, it’s the turn of the Institute of Chartered Accountants of India (ICAI).

An initial probe by the accounting body discovered no irregularities in the accounts statements of IPL teams.

The auditing focus was then extended from the initial year to all three years of the IPL’s existence.

News reports suggest indications of violations of auditing norms.

The final report will be ready in a few months.

G Ramaswamy, president, ICAI said: “It may take some more time to furnish the report.”

Findings will be submitted to the Ministry of Corporate Affairs (MCA).

The ICAI will be forced to take action against the teams’ chartered accountants if any evidence of doctored books come to light.

“The kind of financial irregularities we are talking about could not have been possible without the knowledge of the auditors,” said a financial expert, who preferred to remain anonymous.

Valuations of IPL teams, too, are subject to intense scrutiny.

The probe into the IPL has had an interesting side-effect on the functioning of the ICAI.

The country’s accounting standards body are considering constructing modalities and rules for evaluating the “fair value” of talents hired by the sports “industry.”

Another area of interest is the spread of organized retailing and loyalty programmes amongst business establishments.

ICAI’s research committee will be looking to set newer accounting standards and recommend fresh guidelines.

 

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