Evaly fakes audit report

The disputed e-commerce platform, Evaly, already accused of cheating buyers and suppliers out of their fortunes, has given birth to another controversy by filing a ‘fraudulent’ audit report with the Registrar of Joint Stock Companies and Firms (RJSC).

The e-trader submitted its annual financial statements for the financial year of 2019-2020 to RJSC on August 2 which the authority concerned dispatched to the Ministry of Commerce right away.

Though the report was prepared on the pad of SR Islam and Co. Chartered Accountants, the audit firm itself denied straightaway of making any such fiscal report for Evaly. It said the e-commerce company had falsified the report at its own sweet will and all by itself.

Talking to The Business Post, Saiful Alam, managing partner of Islam and Co., said: “I have been with the firm for the last six years. So far as my knowledge goes, Evaly did not have any of its financial reports from our firm.”

“All the audit reports we prepare are submitted to the Institute of Chartered Accountants of Bangladesh (ICAB) annually with the name of the enterprises concerned.”

About the name and address of the audit firm referred to the report, Saiful Alam said someone may have reproduced the pad of Islam and Co. and fabricated it.

Evaly Managing Director Mohammad Russell could not be reached for comment. He did not even pick up his cell phone, nor even replied back to text messages.

Even on Tuesday afternoon when this correspondent paid a visit to the Evaly office at Dhanmondi in the capital, it was not possible to meet him, though the company website gives information that the e-commerce shop is open from 9am to 8pm.

Enquired of the company boss, the staff out there replied to this correspondent, “Our boss works at night. He turns up here around 8 to 9pm.” Asked whether there are any responsible persons to talk to, they answered in the negative.

When Evaly’s Audit Department was contacted, its Audit Manager Syed Mahadi told The Business Post over phone that SR Islam and Co. may have many partners. One of them has certainly made the audit while it may so happen that others do not know about it.

“May be the person you talked to was not involved in this particular audit,” a confident Mahadi said to this correspondent.

He asserted that Evaly has talked to the SR Islam and Co. partner involved in the preparation of the audit report, and the partner has asked the e-commerce platform to make it public that the said chartered accountancy firm carried out the financial audit for Evaly.

Asked why then SR Islam and Co. does not have Evaly’s name in its audit list of 168 companies submitted to the ICAB, Mahadi said by the time an active client enters the audit network, it is listed. But it is not a matter of urgency.

All audit firms list the names of the companies they do the audit for; however, there are some that carry out the audit but do not keep the names of the companies in their inventory, he gave the version, claiming that the CA firm has audited many other companies like Evaly, but it did not enlist all of them either.

“Saiful Alam may have said according to his document that did not include Evaly’s name. There are many firms listed in the ICAB, and also there are many not listed there,” Mahadi continued.

This might be the case for Evaly, and if you contact Saiful now, he will definitely tell you that they have performed the audit, he went on telling the cock and bull story.

Following tasty talks with the Evaly official, The Business Post again contacted Saiful Islam when he further refused outright the claim made by the Evaly’s audit manager.

“Ask the e-commerce company to prove that they got the audit report from Islam and Co.,” Saiful threw a challenge to Evaly.

Experts said the audit report is falsified to cover irregularities, embezzle and siphon off money. Apart from this, Evaly can resort to scams solely for money laundering. They suggested that the Ministry of Commerce ask the audit firm to check and sort out the matter.

The commerce ministry can put up Evaly under grilling. If their responses are not satisfactory, it is necessary to take action according to the law, opined the experts.

Advocate Shah Muhammad Ezaz Rahman specialised in company law said a case could be filed with the panel court under the criminal law. The Ministry of Commerce or RJSC can also file a case with the Magistrate Court as a criminal offense under the Companies Act.

“These are punishable crimes. Audit firms can also sue for fraud in the same process. Fraudulent customers of any company can file a civil suit for recovery of money. Creditors and shareholders can also follow suit in this regard,” added the counsel.

A company law expert Advocate Ahsanul Karim said it is unjust to conceal financial accounts. The commerce ministry can file a lawsuit in connection with the fraud. Customers and shareholders of the company can also sue for this.

“Many people make fake reports to evade tax. In this case, the National Board of Revenue should take legal action. The audit firm can do the same against Evaly for unauthorised use of its pad and its name that have tarnished the image of the auditor,” he pointed out.

Tapan Kanti Ghosh, secretary to the Ministry of Commerce, told The Business Post, “The ministry will check whether the Evaly audit report has been forged or not. If any evidence of fraud is found, action will be taken as per the law.”

A committee has been formed incorporating the Ministry of Home Affairs, Department of Information Communication and Technology, NBR, Bangladesh Bank, e-Cab and other agencies concerned. The committee will meet soon and decide on further steps.

Seeking anonymity, a former official of Evaly, said there are a lot of irregularities lying with the online shopping mall.

“Not only me, if any executive out there raises any question, they would run the risk of losing their jobs. To fear of retrenchment, none raises voice,” he added.

Evaly started its journey in December 2018. According to its audit report for Fiscal Year 2019-20, the company incurred a loss of Tk 2,29,000 six months after launching. At the end of FY 2019 and FY 2020, the amount of loss rose to over Tk 2 core and 38 lakh and Tk 103 crore respectively.

However, the company claims that its intangible assets were Tk 54 lakh at the end of June 2019. At the end of June 2020, it increased to Tk 12,12,55,000. It stands at Tk 4,38,45,00,000 now.

According to the report, Evaly has received an advance of Tk 1.65 crore from customers till June 30, 2020. It owes over Tk 9 crore to its suppliers.

Earlier in two different submissions to the commerce ministry, Evaly stated that it owes Tk 311 crore and Tk 206 crore to its clients and merchants respectively.

A member of the ICAB said the audit report suggests that there is something fishy in Evaly’s statement of account.

There are some rules to follow when calculating intangible assets of a company. In Evaly’s case, it was not maintained, added the member.