Auditor Deloitte has raised concerns about inappropriately approved vendors and excessive payments at BharatPe, where its former MD and Co-founder Ashneer Grover has been accused of fraud and embezzlement.

In its most recent annual report, BharatPe presented the statutory auditor's opinion that the company's internal control system for vendor selection and invoice approval for the purchase of goods and services was not operating effectively, resulting in procurements at inappropriately approved prices.

BharatPe's annual report in the following section stated that there were no instances of fraud reported by auditors to the board of directors.

Referring to the report, Grover wrote on twitter, "Ek bhi journalist ne BharatPe India ki annual FY22 report nahi padi - auditor ne clearly likha hua hai 'NO instances of FRAUD reported by Auditors to the Board of Directors'. @Deloitte is the auditor who were paid Rs 4 crore audit fees (up from Rs 40 lakh I paid them as MD) and clearly found NOTHING," Grover wrote on Twitter

Further he said, "Doosri baat - Jin forensic audit ki aap baat kar rahe ho @alvarezmarsal and @PwC - unpe @bharatpeindia ne Rs 9 crore kharche ke baad unki report ko junk kar diya - woh usko na to Court mein pesh kar rahe hai na police ko - to sawaal aapko apne Maliko se poochna chahiye mujh se nahi." (The report of forensic audit [into allegations against Grover and his family] by Alvarez and Marsal and PwC, on whom Rs 9 crore was spent by BharatPe, was junked and was neither presented to court or police. And question on it should be asked to them and not to him).

BharatPe has accused Grover, his wife Madhuri Jain, and other family members of forging bills, enlisting phoney suppliers to supply services to the company, and overcharging the firm for recruiting in police and court charges. It is claiming damages of up to Rs 88.67 crore.

The corporate governance assessment conducted by Alvarez and Marsal, Shardul Amerchand Mangaldas, and PwC resulted in Jain's dismissal as head of controls at BharatPe. Grover left the corporation and its board of directors in March of last year.

The annual report said, citing statutory auditors', "The company's internal control system for vendor selection were not operating effectively which resulted in procurement of goods and services from inappropriately approved vendors and/or at inappropriately approved prices."

BharatPe's "internal control system for approval of invoices for purchase of goods and services were not operating effectively, which resulted in other expenses being recorded without receipt of goods and services and/or in excess of actual quantity received, resulting in excess payments being made towards such expenses," the report said.

The report also highlighted that the firm did not have adequate controls over period and adjustments including related presentation and disclosure.

BharatPe filed a civil claim in the Delhi High Court against such former workers, Grover, and third parties, seeking "recovery of misappropriated sums."

The claims amounting to Rs 88.7 crore relates to dishonest and fake transactions; payments for personal expenditure, reversal of GST Input Tax Credit and payment of penalty to GST Authorities in order to conceal the said Dishonest Transactions; loss and injury caused to the brand, reputation, and goodwill of the parent company, it said, adding that the firm has also filed a criminal complaint with the Economic Offences Wing, Delhi against such former employees and third parties.

In response to the auditor's note, BharatPe stated in its annual report that "there were instances of override of internal controls by certain erstwhile employees (in collusion with known and unknown third parties) in the vendor selection and onboarding, procurements, processing of bills for payment, charging personal expenses to the company, and related party transactions."