RCOM books to be scrutinised

The Department of Telecom has finalised an auditor to scrutinise the account books of Reliance Communications and its subsidiaries to ascertain whether the company has violated revenue reporting norms by showing income from non-voice services under its Internet services licence.

While five auditing firms were shortlisted, DoT has approved the appointment of Parekh & Co to audit RCom’s accounts for 2007-08.

The other short-listed auditors were Chhajed & Doshi, Contractor, Nayak & Kishnadwala, Varma & Varma and G D Apte &Co.

These firms are empanelled by the Comptroller & Auditor General of India. DoT had received a list of 10 auditors from the office of CAG of which four firms have quoted between Rs 10 lakh and Rs 1.35 crore as their fees.
Special audit

DoT will ask the auditing firm to conduct a special audit of RCom’s accounts after it was alleged that the company was separating its revenues generated from data services to give lower revenue share to the Government.

Income from services such as R-world, SMS, rural telephones under support from USO fund, Internet browsing was reported under RCom’s Internet subsidiary as the Government levies a lower revenue share on revenues from ISP licence.

The company has strongly refuted all allegations.

In an earlier response to a similar query, Reliance Communications had stated that its accounts have been duly audited and certified by internationally recognised auditors and are in full compliance with the prescribed reporting framework.

The company operates a wide range of telecom services using multiple technologies in order to serve the communication needs of many million Indians. These services are classified under the respective licences for reporting to authorities according to the prescribed guidelines.
Public domain

The company had also said earlier that the reporting formats are available in the public domain and details of every head have been clearly specified while reporting to the respective authorities according to the formats.

The Chief Vigilance Commission had asked DoT to investigate alleged irregular revenue reporting by RCom.

The issue had come to light after the Cellular Operators’ Association of India had pointed out to the Government that RCom was showing its income from non-voice services under the Internet licence even though the facility was being provided through the cellular network.

While operators do not have to pay any revenue share for income earned from Internet services, they have to pay between 6 per cent and 10 per cent of their annual revenue from mobile services to the Government. COAI had pointed out that an operator could make huge profits by showing income from data services under the ISP licence.