Auditor picks holes in Pristyn Care’s ‘internal controls’

livemint.com:

₹50 crore in revenue. In its qualified opinion on Pristyn Care’s internal controls, the auditor noted material weaknesses related to three areas: pricing for hospitals and patients, agreements with doctors and the vendor selection process.

First, Pristyn Care “did not have internal controls for accurate determination of prices charged to patients or hospitals," the auditor noted. Secondly, a Pristyn employee provided the auditor with “certain documentary evidence in relation to agreements with doctors, which were not genuine." Internal controls in relation to “review and authorization of the calculation of doctor expenses" were partially based on “unsigned agreements," the auditor said.

Thirdly, Pristyn’s vendor selection process through competitive price analysis was not operating efficiently. All of these concerns, BSR said, could result in an overstatement or understatement of revenue recognized, and an overstatement or understatement of expenses related to surgeries, doctors or patients in the books.

For doctors, it could also result in incorrect disbursements, and in the case of vendors, it could result in unfavourable commercials for the company, the auditor said. To be sure, many high-profile startups have raised auditors’ eyebrows regarding internal controls.

The auditor for edtech giant Byju’s noted an ‘adverse opinion’ on its internal controls related to customer collections and revenue recognition in FY21, while auto service startup GoMechanic was found to have not established internal controls despite being required to do so. On 30 August, Mint reported that BSR had earlier asked Pristyn Care to appoint a different agency to do an internal audit to “provide comfort" before signing off on the statements.