Pristyn Care audit spots 'weaknesses' in internal controls

The latest financial audit of Pristyn Care spotted “material weaknesses" in its internal controls but was satisfied that the healthcare unicorn presented a “true and fair view" in its financial statements, two people aware of the matter said.

- Ranjani Raghavan

BSR & Co., the Indian affiliate of Big Four auditor KPMG, recently signed off on the much-delayed FY22 statements of GHV Advanced Care, which owns Pristyn Care. The company has yet to file the statements with the ministry of corporate affairs.

The auditor’s concerns appear in a ‘qualified opinion’ on so-called internal controls governing policies and procedures, which maintain the accuracy and integrity of financial statements. Internal controls apply to companies after they hit ₹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.