(Reuters) – Software supplier Ebix Inc said on Friday RSM US had resigned as the company’s registered public accounting firm, sending shares down nearly 20% in extended trade.
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 December 31, 2020 due to the identification of a material weakness,” RSM said in its resignation letter on Feb. 15.
Ebix said the company did not agree with certain statements made by RSM, and that it was now seeking a new auditor.
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 in Bengaluru; Editing by Arun Koyyur and Diane Craft)
