RSM told Ebix’s audit committee chairman it was resigning as a result of being unable to obtain sufficient evidence to evaluate the business purpose of “significant unusual transactions” in the fourth quarter of 2020, according to a regulatory filing.
The auditor informed Ebix that there was a disagreement with respect to the classification of $30 million and flagged unusual transactions concerning Ebix’s gift card business in India.
Internal control over financial reporting was not effective as of Dec. 31, 2020 due to the identification of a material weakness, RSM said in its resignation letter on Feb. 15.
Johns Creek, Georgia-based Ebix said in a statement it did not agree with certain statements made by RSM and believed that the accounting for its gift card business was consistent with GAAP, or generally accepted accounting principles, requirements.
“The Company intends to move as quickly as possible to replace RSM and to complete its 2020 financial audit,” Ebix added.
India’s Yatra Online Inc last year terminated a pending merger agreement with Ebix and filed suit seeking “substantial” damages for Ebix’s alleged breach of deal terms. Reporting by Sanjana Shivdas and additional reporting by Derek Francis in Bengaluru; Editing by Arun Koyyur, Will Dunham and Diane Craft